US stocks were swept up in a global sell-off on Monday as investors grappled with spreading coronavirus fears. The Dow Jones industrial average plummeted as much as 1,080 points — or 3.7% — on Monday. That erased the index's gains for the year. The S&P 500 slid 3.4%, its biggest loss since February 2018. Meanwhile, the Cboe Volatility Index — or VIX, widely known as the stock market's fear gauge — spiked as much as 54% to levels not seen since early 2019. The flight out of risk assets and into safe havens sent the US 30-year Treasury yield to a record low, and gold is trading at the most expensive levels all year. Read more on Business Insider.
US stocks were swept up in a global sell-off on Monday as fears over the spreading coronavirus — and its negative economic implications — rattled investor nerves. The Dow Jones industrial average fell more than 1,000 points in on Tuesday for a 3.7% decline. That erased the index's gains for the year. The S&P 500 tumbled roughly 3.4%, while the tech-heavy Nasdaq Composite index lost 3.7%. Meanwhile, the Cboe Volatility Index — or VIX, which is widely known as the stock market's fear gauge — spiked as much as 54% to its highest level since early 2019. The latest sharp move lower comes as the coronavirus outbreak has spread to more than 30 countries. Over the weekend, delegates at the Group of 20 meeting of major economies warned that coronavirus could undermine global growth. The IMF also cut its yearly growth projection for China by 0.4 percentage points. Here's how the major US indices closed: Dow Jones industrial average: Down 1,032 points, or 3.6% — intraday low down 1,080 points S&P 500: Down 3.3% — intraday low -3.7% Nasdaq Composite: Down 3.7% — intraday low -4.3% Read more: 'It's a clear bubble': A former Goldman Sachs hedge fund chief sounds the alarm on flailing stocks — and warns the nefarious effects of coronavirus have 'only just started' Every sector in the S&P 500 traded in the red, with the energy (-4.7%) and information technology (-4.2%) indices leading declines. Advanced Micro Devices — a semiconductor maker with significant supply chain exposure in China — saw the most active trading in the early market and tumbled roughly 8%. Fear about how coronavirus could disrupt the supply chains and growth of the world's corporations were also responsible for rattling markets on Monday. Apple, Disney, and Starbucks are some of the highest profile names that have seen disruptions in their businesses because of the virus. Meanwhile, investors are fleeing to higher ground: Safe-haven asset gold reached $1,687 Monday, the most expensive all year. The yield on the 30-year US Treasury fell to a historic low of 1.8%, while the yield on the 10-year fell to 1.4%, a low not seen since 2016. Price moves inverse to yield. Read more: A Wall Street firm lists its 5 best hedges for an unusual coronavirus-driven market crash — and shares what to do if it's successfully containedJoin the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption
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Global stocks rise despite Fed's Powell warning that the coronavirus downturn could last until late 2021
Global stocks climbed on Monday as investors brushed off Federal Reserve chairman Jerome Powell's warning that...Global stocks climbed on Monday as investors brushed off Federal Reserve chairman Jerome Powell's warning that the coronavirus-fueled economic downturn could last until the end of next year. US oil prices jumped more than 5% to a 2-month high, passing $30 a barrel for the first time since prices turned negative in late April. Gold rose about 1% to its highest level in more than seven years. Visit Business Insider's homepage for more stories. Global stocks climbed on Monday as investors brushed off Federal Reserve Chair Jerome Powell's warning that the coronavirus downturn may linger until late 2021. In a "60 Minutes" interview on Sunday, Powell said that Americans should prepare for a prolonged US recovery as it would "take a while for us to get back." However, he remained optimistic about an economic rebound if there isn't a second wave of infections. Powell acknowledged that the unemployment rate could soar as high as 25%, but expressed confidence that government policies will be able to keep families solvent. "There's a lot more we can do...we're not out of ammunition by a long shot," he said. The comments reassured investors that the central bank can handle further economic fallout, analysts said. "This went some way to reversing the losses Powell provoked last week, when the Fed chair appeared to take negative interest rates off the table," Connor Campbell, a financial analyst at SpreadEx, said in a morning note. Read More: A Wall Street equity chief lays out 5 reasons why another 'significant drawdown' in stocks is coming right after the fastest crash in history Market sentiment likely benefited from easing of lockdowns in several countries and signs of a slowdown in the number of new coronavirus cases. It may also have been buoyed by the House of Representatives passing a second $3 trillion relief bill last week. However, the legislation may not be approved by the Republican-controlled Senate. Meanwhile, the prospect of further government support boosted stocks across the pond on Monday. "Giddy at the thought of some more monetary juice being pumped into the markets, European investors woke up with a spring in their step," Campbell said. Japan's Nikkei index also rose 0.5%, despite the release of official data on Monday showing the world's third-largest economy tumbled into its first recession since 2015. The nation's gross domestic product fell by 0.9% in the first three months of the year, after dropping 1.9% in the fourth quarter of 2019 — before lockdowns and restrictions were even implemented. Exports also fell the most since the crippling March 2011 earthquake. Read More: 'We have a depression on our hands': The CIO of a bearish $150 million fund says the market will grind to new lows after the current bounce is over — and warns 'a lot more pain' is still to come Here's the market roundup as of 11:25 a.m. in London (6:25 a.m. ET): European equities rose, with Germany's DAX up 2.7%, Britain's FTSE 100 up 2.1%, and the Euro Stoxx 50 up 2.1%. Asian indexes climbed with China's Shanghai Composite up 0.2%, Hong Kong's Hang Seng up 0.6%, and Japan's Nikkei up 0.5%. US stocks are set to open higher. Futures underlying the Dow Jones Industrial Average, the S&P 500, and the Nasdaq rose between 1.2% and 1.5%. Oil prices jumped, with West Texas Intermediate up 7% at $31.60, and Brent crude up 5.6% at $34.30. The benchmark 10-year Treasury yield rose to 0.64%. Gold rose 0.9% to $1,772, its highest level in more than seven years. Read More: GOLDMAN SACHS: Buy these 14 stocks poised to surge in an economic recovery because of their limited exposure to consumersSEE ALSO: Fed Chairman Jerome Powell says economic downturn could last until late 2021 Join the conversation about this story » NOW WATCH: Pathologists debunk 13 coronavirus myths
US equities climbed on Monday, extending gains from Friday's session as investors cheered economic-reopening plans. New...US equities climbed on Monday, extending gains from Friday's session as investors cheered economic-reopening plans. New York Gov. Andrew Cuomo on Sunday revealed the state's plan for a gradual recovery, a positive signal for the US's coronavirus hotspot. Oil missed out on the market upswing, sliding as much as 30% amid continued stress on global storage and accelerated production cuts. Watch major indexes update live here. US stocks climbed on Monday as economic-reopening plans around the world fueled fresh investor optimism. All three major indexes climbed for a second straight day after states including Alaska, South Carolina, Georgia, and Texas began the first phases of business reopenings. The Dow Jones industrial average rose for a fourth consecutive session. New York Gov. Andrew Cuomo on Sunday revealed the state's plan for a gradual recovery, adding that the outbreak in the US's virus hotspot had mostly been contained. "Short term, the numbers are on the decline. Everything we have done is working," Cuomo said, though he cautioned that people shouldn't be "getting too far ahead of ourselves." Here's where major US indexes stood at the 4 p.m. ET market close on Monday: S&P 500: 2,878.48, up 1.5% Dow Jones industrial average: 24,133.78, up 1.5% (359 points) Nasdaq composite: 8,730.16, up 1.1% Read more: Goldman Sachs outlines a 3-part investing strategy to profit from the economy's reopening — including 4 stocks to buy for the recovery Spain, Italy, and France all made early moves to reboot their economies after data showed coronavirus deaths slowing further in the eurozone. Still, even if reopenings kick off at the end of spring, a full economic recovery could take four years, Scott Minerd, the chief investment officer of Guggenheim Investments, said in a Sunday note. The government and the Federal Reserve's relief policies will emerge "insufficient, misdirected, and full of unintended consequences," he said, forecasting an L-shaped trend for the nation's gross domestic product. "The Fed and Treasury have essentially created a new moral hazard by socializing credit risk," Minerd wrote. "The United States will never be able to return to free market capitalism as we knew it before these policies were put in place." Read more: RBC: The world's biggest investors are piling into these 11 high-growth stocks to stay ahead of a market hammered by coronavirus fears Positive stock sentiment did little to buoy the ailing oil market. West Texas Intermediate crude contracts slipped as much as 30%, to $11.88 per barrel, slammed by growing fears of a global storage crisis. US firms have already slowed drilling activity to prop up the market, while Saudi Arabia accelerated production cuts originally intended for May 1. Brent crude tumbled 11%, to $19.11 per barrel at intraday lows. The commodity-market volatility could last several more weeks, Goldman Sachs said in a Friday note. The bank's analysts see global oil storage hitting its limit in as little as three weeks. Stabilizing the market would require cutting worldwide production by 18 million barrels per day by mid-May, nearly double what OPEC+ agreed to cut at an April meeting, the team added. Read more: A renowned market bear says stocks are setting classic trap before another steep plunge — and says the market is at risk of a 57% drop from current levels The rest of the week is poised to deliver a range of macroeconomic-data releases and economic-policy updates. The Fed, the European Central Bank, and the Bank of Japan are all scheduled to hold monetary-policy meetings and issue updates on plans to further fight the coronavirus pandemic's economic fallout. Quarterly earnings reports from Amazon, Apple, Boeing, and Visa this week will further detail the pandemic's hit to corporate performance. Now read more markets coverage from Markets Insider and Business Insider: The US economic recovery could take 4 years after government relief efforts come up short, Guggenheim's Scott Minerd says The Fed's 'QE4ever' stimulus will push stocks to record highs in 2021, one of Wall Street's biggest bulls says GOLDMAN SACHS: These are the top 11 companies to watch as we enter the best stock-picking environment in over a decadeJoin the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship
14 Wall Street experts told us the single metric they're each watching to assess coronavirus market fallout — and give their portfolios a leg up
Business Insider asked 14 investment strategists and analysts to share one crucial metric, index, or signal...Business Insider asked 14 investment strategists and analysts to share one crucial metric, index, or signal they're closely tracking as the novel coronavirus throws markets and economies into disarray. Their answers illustrate where experts are looking to gauge when the worst may be over for investors. "What matters for the market right now is the cresting of virus cases — not PMI data, not earnings revisions, and certainly not GDP estimates," one chief investment strategist said. Visit BI Prime for more investing stories. The novel coronavirus, with the devastation it's inflicted on economies around the world, has created a chaotic environment for investors that's virtually unparalleled. In the US, the longest bull market in history ended, but then the Dow Jones Industrial Average reentered one within weeks. Amid those price swings, a widely used measure of expected market volatility jumped to its highest level on record. The Federal Reserve attempted to stabilize the market with two emergency interest-rate cuts in March. That lowered borrowing costs and was designed to stimulate economic activity at a time when officials mandated quarantines, businesses shuttered, and experts forecast a skyrocketing unemployment rate. Now, as markets whip around into early April, and the investment community expects further deterioration of economic growth, investors are on edge in a highly uncertain environment. After all, there is no real COVID-19 playbook to consult. For a window into how strategists are judging the unprecedented macroeconomic environment, Business Insider asked 14 investment strategists and analysts to share one crucial metric, index, or signal they're closely tracking as they assess the ultimate damage the coronavirus will inflict. For the sake of drawing from a wide variety of economic and market gauges, we asked experts to provide a response other than the widely cited US jobless claims, which hit 6.6 million last week for a two-week total of almost 10 million. Their answers illustrate how they're gauging when the worst may be over for investors. Several told us the number of new coronavirus cases is the most important figure to watch — even more so than any core measure of the US economy. "The current environment has us paying less attention to economic data and laser-focused on the virus data," Ed Campbell, a portfolio manager and managing director at QMA, told Business Insider. Their responses come just ahead of corporate earnings season, which will give investors early evidence of how the virus has negatively affected a wide variety of public companies. First-quarter earnings for S&P 500 companies are expected to decline 7.3%, the largest year-over-year drop since falling 15.7% in the third quarter of 2009, according to FactSet. Here are the singular measures 14 experts told us they're watching:Lisa Emsbo-Mattingly, Fidelity: the Commodity Research Bureau's raw-industrials spot-price index Lisa Emsbo-Mattingly, the director of research for global asset allocation at Fidelity Investments, is keeping a close watch on commodities of all kinds. She's carefully monitoring the Commodity Research Bureau's raw-industrials price index, which tracks the direction of widely used commodities such as copper scrap, lead scrap, steel scrap, cotton, burlap, and rubber, according to Yardeni Research. The index, which was constructed in the 1950s, takes a look at the price of commodities harnessed in overall industrial activities. On Friday, the measure was near a four-year low. Emsbo-Mattingly considers the measure reliable because it's a real-time indicator of global economic activity and the strength of the US dollar. "When we see the CRB raw industrials begin to move consistently up, we will feel more confident on the outlook for US and global growth," she told Business Insider. David Aurelio, Refinitiv: semiconductor equipment Digital dependency has exploded in recent years, but the pace has picked up through the pandemic. Consumers are relying heavily on technology for connection as they spread away from peers and their workplaces. "At the heart of this expansion are semiconductors," David Aurelio, the senior equity-markets-research manager at Refinitiv, said, referring to the components and circuits found in many of our devices and computers. "If semiconductor-equipment companies are expected to grow, then expect to see economic expansion to follow," he said. The S&P 500 semiconductor-equipment subindustry is expected to report a rise in earnings this year of 16.8%, and nearly 24% next year, outpacing the broader market's earnings expectations, Aurelio said. With analysts' expected growth of 5G capabilities, too, the overall health of the semiconductor sector indicates "there is reason to be optimistic about economic expansion," Aurelio told Business Insider. The VanEck Vectors Semiconductor ETF has fallen about 22% this year, about in-line with the S&P 500's decline. He's also keeping a close watch on analysts' earnings revisions for companies' first-quarter earnings results. Solita Marcelli, UBS Wealth Management: areas of the market that may be oversold The old saying "throwing the baby out with the bathwater" refers to getting rid of something valuable in an unavoidable — yet mistaken — fashion while trying to reject something more broadly unfavorable. There's been a lot of that during the severe market sell-off, said Solita Marcelli, the deputy chief investment officer for the Americas at UBS Global Wealth Management. She pegged that dynamic — companies of all fundamentals being bought and sold indiscriminately, regardless of underlying strength — as one major theme she is closely monitoring to gauge the sell-off's condition. "Many stocks that have strong balance sheets and long-term cash-generation power have been hit just as much as those that are much weaker," she wrote in a recent note to clients. "This has created an enormous opportunity to own high-quality names that will differentiate themselves once dust settles." Just consider the median return for names with varying S&P quality rankings from the market's high on February 19 through March 20. They show a brutal sell-off that hasn't spared many. For instance, stocks with A+, A, and A- rankings have returned about -32 to -36% during that time — a showing not much better than names with the far weaker B- and C rankings, which have returned -44 and -31% during the same time, according to a UBS and FactSet analysis. Sam Stovall, CFRA Research: the S&P 500's rolling 15-day average intraday percentage price change One popular way to measure stock-price swings is the Cboe Volatility Index, known as the VIX — and even better known as the market's "fear gauge." The forward-looking index takes the S&P options' implied moves and conveys the level of expected volatility over the next 30 days, rather than "realized," or actual, volatility. As the markets have gone haywire, the VIX spiked just above 80 last month in its highest reading on record and fell in recent weeks to about 50 on Friday. Still, these figures are elevated; the index stayed below 20 for most of 2019. For a more granular look, the VIX is hardly the only way to look at how wildly stock prices are moving. Sam Stovall, the chief investment strategist at CFRA Research, told us he was looking to another measure of equity-market swings to gauge "when the worst may be behind us." He watches the rolling 15-day average intraday percentage price change on the S&P 500. We checked in with Stovall on March 30, when US stocks rose on the back of the Trump administration's expanded social-distancing measures. During that Monday session, his measure was "still on the ascent," so he didn't think the worst was over "just yet." The index's average intraday change on a percentage basis stood at 6%, the largest such mark since the 2007-09 financial crisis. On April 3, we checked in for an update. "My volatility measure has been on the descent" since March 27, "implying that the worst may be behind us," Stovall said. Frank Cappelleri, Instinet: the NYSE Tick index As a technical analyst, Frank Cappelleri spends a lot of time examining the minutiae of markets. Cappelleri, Instinet's chief market technician, regularly sends clients market snapshots throughout the trading session, detailing key levels to watch on the S&P 500 and providing historical context around the market's moves. He told Business Insider that lately he's paying attention to one investors might be missing out on: the NYSE Tick index, which measures the difference between stocks listed on the New York Stock Exchange moving higher and those moving lower at any point in time. During periods of relative market calm, the index is generally between minus 1,000 and plus 1,000, he said. For instance, the average tick range between October and February 19 — the S&P 500's closing high — was 1,700. Since then, the average has been 2,700, marking a rise of nearly 60%, he said. As long as that range remains wide, investors can expect conditions to remain stressed. By design, the index can highlight a situation that the widely used VIX may not fully be able to show. While investors know volatility as measured by the VIX has "exploded," Cappelleri said, it spikes only during severe market sell-offs, while the NYSE Tick index "reveals acute intraday activity in both directions by displaying outsized movement in both buying and selling surges." Emily Roland, John Hancock Investment Management: the US dollar's direction Through the market's recent chaos, Emily Roland — the co-chief investment strategist of John Hancock Investment Management — told us she was closely watching the US dollar's direction. "It will provide important clues to cross-asset class performance," Roland said. The US dollar index measures the greenback's value against a basket of other currencies, most heavily against the euro. In March, it shot up to the highest point in more than three years as "investors frantically raised cash," Roland said. It has risen by about 4% this year. The strategist believes the US will emerge from the coronavirus crisis in a more resilient fashion than other economies and expects the dollar to maintain strength as volatility subsides across currency markets. Amanda Agati, PNC Financial: sub-investment-grade bonds Last month, alongside two emergency interest-rate cuts, the Federal Reserve announced a laundry list of new measures to aid the economy through the economic damage the coronavirus crisis is causing. Among other programs, the US central bank created credit facilities to support credit going to large employers. One was formed to purchase corporate bonds issued by investment-grade US companies, as well as US-listed exchange-traded funds whose purpose is to provide "broad exposure to the market for US investment grade corporate bonds." But "none of the Fed's tools directly support the below-investment-grade fixed-income market," Amanda Agati, the chief investment strategist at PNC Financial, told Business Insider. That's why she's keeping a close watch on how bonds with sub-investment-grade ratings, an area which includes the high-yield segment, are faring without that extra injection of support. For instance, more than 10% of the Bloomberg Barclays High Yield index is made up of names in the energy sector, Agati said. The $2 trillion fiscal stimulus package that passed in the US last week did not include language around relief for shale-oil producers — a particularly challenged industry with plunging oil prices and slowing global economic growth, she said. Agati is also closely watching the Cboe Volatility Index and new cases of COVID-19. Her team believes that number must slow in countries like Italy and the US before the market finds a bottom. "In other words, what matters for the market right now is the cresting of virus cases — not PMI data, not earnings revisions, and certainly not GDP estimates," she said. Liz Ann Sonders, Charles Schwab: the case curve of COVID-19 The most important metric for investors to pay attention to is COVID-19's case curve, Liz Ann Sonders, the chief investment strategist at Charles Schwab, said. That's "for every reason, including the health of Americans, the health of our economy, and the health of the stock market," she told Business Insider. "Until we start seeing a bending of the curve, it's hard to envision a light at the end of the tunnel for either the economy or stocks," she said. The US has the largest reported virus outbreak, representing more than one-fifth of cases worldwide, Business Insider has reported. Deepak Puri, Deutsche Bank Wealth Management: broad US financial-market conditions A selection of readings reflecting broad US financial-market conditions — funding-market stress, financial-market liquidity, and US corporate-credit spreads — are top of mind for Deepak Puri, the chief investment officer for the Americas at Deutsche Bank Wealth Management. As spreads across the investment-grade- and high-yield-credit markets have widened to levels not seen since the global financial crisis of 2007-09, "fixed-income investors have shown a very little appetite for credit risk," Puri told Business Insider. "So far, we are encouraged that the 'do whatever it takes' approach by monetary policymakers has helped restore confidence in the credit markets, along with the added liquidity," he added. Tony Roth, Wilmington Trust: declines in gross domestic product Tony Roth, the chief investment officer of Wilmington Trust, the investment-advisory arm of M&T Bank, is closely watching for declines in US gross domestic product. Roth estimated that the precautions states are taking across the US to mitigate COVID-19's spread could lead to a 34.4% annualized rate of decline for the second quarter if the current conditions persisted for three months from early April. "That would be by far the worst rate witnessed in US history of GDP data, going back to 1949," he told Business Insider, adding a slow resumption in economic activity during the second half of 2020 would lead to a decline of 2.6% for the year. If the entire US were to operate under stay-at-home orders for the next three months, that could lead to a more severe scenario with businesses remaining closed and consumers continuing to curb spending, Roth said. That would lead to a 61% annualized rate of decline for the second quarter and a drop of 8.5% for the year, according to his projections. Roth sees markets higher nine months to a year from now. "Currently, our recommendation to clients is to rebalance, avoid selling if you don't need immediate liquidity, and if you have new cash, average this into the market on a slightly accelerated time frame," he said. Katie Stockton, Fairlead Strategies: a key technical range on the S&P 500 Katie Stockton, the founder and managing partner of Fairlead Strategies, an independent-research provider with a focus on technical analysis, is laser-focused on key levels for the benchmark S&P 500. "As a technical analyst, support and resistance levels are incredibly important as a gauge of risk/reward," she told Business Insider. Stockton sees the index's risk framed by long-term support of about 2,300 to 2,350. She arrived there after considering a 38.2% Fibonacci retracement level (a term in technical analysis referring to areas of support or resistance), the S&P 500's low in December 2018, and another technical metric called the monthly cloud model. "This level is key toward the preservation of the uptrend that began in 2009, in my opinion," she said. The dip below that area in March was not a technical breakdown, she said. For that kind of damage, she requires consecutive weekly closes below support, "especially in emotionally charged environments, which are prone to shakeouts," or "false breakdowns," Stockton said. Ed Campbell, QMA: COVID-19 data "The current environment has us paying less attention to economic data and laser-focused on the virus data," said Ed Campbell, a portfolio manager and managing director at QMA, the quantitative-equities and asset-allocation business at PGIM, Prudential's investment-management arm. With the lockdown measures in place during the coronavirus outbreak, economic data will "cease to have value for markets," so he's watching for the trajectory of new infections to indicate when quarantines will end and economic activity will pick back up. He believes the path of cases in the US is closely tracking cases in Italy — which has the highest reported death count — with a two-week lag. "Should Italy's decline in new cases continue and point in the direction of containment, it may lead to the expectation that an apex and containment for other Western countries are not far behind," Campbell said. "This could be an important inflection point for markets." John Stoltzfus, Oppenheimer: how the spread of COVID-19 is being contained John Stoltzfus, Oppenheimer's chief investment strategist, told Business Insider that the most important indicator for a sustainable stock market rally is the progress made in stemming COVID-19's spread. "At the end of the day, it's a health-risk story with economies on lockdown," he said. The coronavirus has spread to nearly all of the world's countries and territories, according to data from Johns Hopkins University. Ryan Detrick, LPL Financial: a peak in US coronavirus cases Ryan Detrick, the senior market strategist at LPL Financial, said the biggest factor he's been watching is a peak in the number of coronavirus cases in the US. "While US cases continue to climb, the more countries that reach their peak, the more clarity we gain into what that timing may look like for the United States," Detrick said. The US has recorded the highest number of cases, with just over 337,000 confirmed, according to Johns Hopkins University's database. More than 1.2 million people around the world have been sickened by the coronavirus. "Investors have historically been rewarded for investing during these crisis events, and we believe the time for suitable investors to consider adding some risk to their portfolios may be approaching," he said.