The increase in coronavirus cases finally took a good-sized bite out of the market on Wednesday with each of the major indices shedding more than 2%.
For the past couple of weeks, stocks had been cautiously shrugging off the rising numbers in certain parts of the country.
However, New York, New Jersey and Connecticut announced today that they will somehow try to quarantine visitors from several of those hotspots, which underscores investor fears that the reopenings may have to pause for another wave.
In addition, we saw cases jump in Florida, California, Texas and Arizona. Also, Apple (NASDAQ:AAPL) said it would re-close 7 stores in Houston, which comes after shuttering 11 stores temporarily in four states last week.
The Dow dropped 2.72% (or about 710 points) on Wednesday to 25,445.94. It did close a bit off its lows of the session at around 860 points.
Meanwhile, the S&P slipped 2.59% to 3050.33, while the NASDAQ’s eight-day winning streak ended with a dip of 2.19% (or around 222 points) to 9909.17.
This was the worst selloff since June 11, which was actually much worse with the Dow collapsing by more than 1860 points while the S&P and NASDAQ each lost over 5%.
Just like that other selloff though, investors were waiting for a pullback as the market continued moving mostly higher despite uncertainties on the reopenings and the economic recovery. Stocks have still gained in four of the past five weeks.
So, is this the beginning of a more prolonged move lower or just a one-day selloff? The purge earlier this month was followed by a partial rebound the next day and a positive performance for the following week.
However, coronavirus cases continue to rise and now states and companies are beginning to take action.
It looks like the headlines will decide what happens from here. But this time, we’ll be much better prepared for whatever the news cycle brings.
Today's Portfolio Highlights:
Blockchain Innovators: Just one day in the portfolio and FangDD Network (DUO) is already the top performer of the day among all ZU services. It advanced nearly 8.3% while the S&P dropped 2.6%. Dave added this China stock yesterday because he likes the idea of combining real estate transactions with blockchain.
Counterstrike: "So we saw fear come back with a VIX spike and markets sell off. The S&P came down to the 200-day and bounced so the bulls should be happy with that. I view 2950 in the S&P as a very big level for the bulls.
"While the headlines and market action can be scary, I don’t think today’s move is something to get nervous about. We mentioned that it was time for a sell-off and here we are. The next week will give us a pretty clear tell on where we stand, both in relation to COVID and the technicals.
"COVID is threatening a comeback. However, the next two weeks could really tell us just how bad it gets. If NYC and Chicago start ticking up, we have an issue. But if cases stay low in those areas and the South starts to improve, we should see the threat fade. From there, lets hope the containment is managed until a vaccine finally wipes this thing of the planet." -- Jeremy Mullin
All the Best,
Jim Giaquinto
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