WASHINGTON – It’s bad enough that the notorious Wuhan coronavirus has caused an increasing number of deaths as it spreads across the globe with alarming ease. But now it’s infecting stock funds and investors alike as it drains January’s once handsome profits away. This is a virus that could end up wiping out more stock portfolios than people, as CNBC noted in a Friday mid-afternoon post.
Wuhan coronavirus wipes out the Dow. And everything else. Like your stock portfolios…
“The Dow dropped 605 points, or 2.1%, after Delta and American suspended all flights between China and the U.S. United Airlines announced similar measures later in the day. The S&P 500 was down 1.8% while the Nasdaq Composite dropped 1.6%. The Dow was also on pace for its worst day since August.
“The major averages hit their lows of the day as the New York Daily News reported New York City’s first coronavirus case. CNBC could not confirm the report. Stocks dropped even as Amazon surged 8.6% to a $1 trillion market value, joining an elite club shared only by Apple, Microsoft and Alphabet.
Looking forward to a bad news weekend
“Ilya Feygin, senior strategist at WallachBeth Capital, noted traders were unwinding equity positions added on Thursday and in overnight futures trading after the World Health Organization didn’t recommend a travel restriction on China while sentiment got a boost from Amazon’s earnings report.
“But now ‘there’s fear going into the weekend,’ Feygin added. ‘The theme coming into this year was the Fed and Trump are going to bail us out of any problems, but the virus is something neither one can do anything about. That’s a reason to become more fearful.’”
“China’s National Health Commission confirmed on Friday that there have been 9,692 confirmed cases of the coronavirus, with 213 deaths.”
Like most stock portfolios, Mr Market suffered a palpable hit Friday
Market averages attempted a recovery close to the noon hour. But that effort failed miserably. So, as we near Friday’s 4 p.m. closing bell, we still find the Dow Jones Industrials off a depressing 2.03+% on the downside. The broader-based S&P 500 is down nearly as badly. And even the tech-heavy, tech-happy NASDAQ is down about 1.5%. As for today’s closing prices and averages, your guess is as good as mine. But I don’t think we’ll see any green ink today.
Ilya Feygin’s comments, cited above, probably offer the most rational interpretation of today’s dramatic and horrendous reversal of Thursday’s surprise bull surge. What markets hate more than bad news is uncertain news. There’s too much of it these days. So much so that we should’ve seen it coming again last night when we were able to access Thursday’s VIX volatility index chart. It looked ominous.
While it’s impossible to guess how bad or how negligible the economic spillover from the Wuhan coronavirus might be, imaginations run wild among traders, investors and fund managers. And, with the market so happily and blissfully overbought in January, people were bailing out of their stock portfolios anyway and taking their profits with them.
When weekend headlines are uncertain, it’s time to bail
The current Wuhan coronavirus scare is the perfect excuse to accelerate that move. Particularly on the last trading day of the week. Since we all get hit every day with increasing horror stories about the disease’s rapid and effortless spread, many investors don’t want to be in more volatile stocks over the weekend, because God knows what bad news we’ll get hit with next?
The media is hyping it up, though, when they’re not going 24/7 with the fake Trump Impeachment Circus. That old newspaper adage, “When it bleeds, it leads,” still holds true, particularly for partisan hacks like the original Deplorables ensconced in CNN’s parallel universe. If they can’t scare you with the Trump “trial,” they’ll scare you with the Wuhan coronavirus. As in, “We’re all gonna die!” It sells ads. It’s good business. It’s woke politics and virtue-signaling. (But it’s bad reportage.)
UPDATE and final thoughts on a very bad day
At today’s closing bell, the Dow ended the day at 28252.35, a loss of 607+ points on the day, roughly 2.11% on the downside. (Stocks and averages are still running off due to heavy trading as we write this, so final numbers may vary a bit.)
The S&P 500 closed at 3225.31, off 58.34 points for a loss of 1.6%.
Finally, the tech-driven NASDAQ ended the day at 9150.94 for a loss of 148 points – 1.6% in the red.
Personal stock portfolios: RIP
My portfolios got hammered today. Too much red ink for a Friday. But what could anyone expect on a day like today? I reluctantly dribbled out of a few small positions, since they likely won’t do any better next week. So why not raise some cash for the good times after this particularly nasty squall is over? Otherwise, I’m letting most positions ride, although that ride was way too bumpy today.
Next week, we more than likely will see good news (if you like to make money) on the fake impeachment front. Investors who put making money above partisan politics will rejoice if and when President Trump gets a clean slate, which in actuality he already had to begin with. Until Schiff, et. al., decided to get a little Marxist-crazy with the Constitution as it wasn’t written. Of course, watch for the Dems to reveal the next clause in their lengthy 2016 “insurance policy” against Trump.
Balancing this story — and unbalancing our stock portfolios in particular — will be the latest updates on the Wuhan coronavirus. That one is the biggest variable facing us over the next 1-4 weeks. It will tell us whether the storm clouds have passed, or whether we all should immediately update our last wills and testaments.
Stay tuned. And get your flu shot, FWIW.
– Headline image: Wile E. Coyote’s portfolio is doing almost as bad as everyone else’s as coronavirus panic takes hold.
(Warner Bros. classic cartoon image, reimagined for satirical purposes. Fair use.)