A strong, final hour rally helped the market save face on Friday as the major indices closed slightly higher for the week despite another steep morning selloff.
Stocks came into the session solidly in the green after four crazy days, but nobody had confidence that would hold up on a Friday while the coronavirus continues to spread. But it did! Barely.
After collapsing by 12% last week, the Dow was up nearly 1.8% over the past five days. Meanwhile, the S&P advanced 0.6% and the NASDAQ rose 0.1%.
That’s an impressive improvement. However, investors still had to suffer through a frantic week with a couple 1000-point rallies for the Dow that were immediately undercut by strong downturns in the following sessions.
And then the index saw another approximately 900-point plunge today before the late-inning heroics pulled the loss to just under 1%.
In short, investors are relieved we didn’t see a repeat of last week, but are still exhausted as the coronavirus continues to wreak havoc in the market.
On Friday, the Dow ended with a loss of 0.98% (or around 256 points) to 25,864.78. The S&P slipped 1.71% to 2972.37 and the NASDAQ dropped 1.87% (or nearly 163 points) to 8575.62.
Coronavirus fears overshadowed another strong jobs report. The economy added 273,000 last month, which surpassed expectations by nearly 100K.
This report, along with other strong readings for manufacturing and services earlier in the week, do not reflect the full impact of the virus. However, they do show that the economy was on solid footing before the outbreak, which should be a help as we try and get over this sickness.
So what happens next week? No one knows for sure. The number of people infected here in the U.S. will climb as testing ramps up, but the market and the public are expecting that. And President Trump recently signed a more than $8 billion emergency aid package.
Maybe we’re finally starting to get a handle on this situation. But we shouldn’t believe it until we actually see it. In the meantime, let’s be ready for more volatility.
Today's Portfolio Highlights:
TAZR Trader: Investors are still panicking and sending the 10-year Treasury note even further into historical lows. Fortunately, Kevin doesn’t think this will last very long. So he’s steering the ship into the wind for now with expectations of a shift shortly. The editor added ProShares UltraShort 20+ Year Treasury ETF (TBT) on Friday. Read the full write-up for more on this move and to learn Kevin’ plan moving forward.
Counterstrike: It didn't take long for Direxion Daily Financial Bear 3X Shares (FAZ) to pay off for the portfolio. Jeremy added it yesterday as a hedge against the plunging banks. Today’s drop allowed the editor to sell it on Friday for a nice 9.4% gain in just one day.
Stocks Under $10: The portfolio cut three names on Friday, including SunPower (SPWR) for an 11.9% return. Vista Outdoor (VSTO) and Immersion (IMMR) were also sold.
Healthcare Innovators: Healthcare got a nice boost after Super Tuesday earlier this week, but the market is obviously not done correcting yet. Therefore, Kevin sold Direxion Healthcare 3X Leveraged Bull ETF (CURE) on Friday for more than 19% return in just one week.
Zacks Short List: It may look like there was a trade in the portfolio today, but there really wasn’t. What happened was Gardner Denver Holdings merged with a portion of the company that was previously Ingersoll Rand. The new combined entity trades under the ticker (IR). Therefore, Dave closed GDI at the original entry price of $36.47/share and added a new position in IR at 88.24% of that price - $32.18/share. Read the complete commentary for more.
Value Investor: With the market still dropping, Tracey is staying true to her stops to protect the portfolio from this volatility. The editor sold four names on Friday, including WW (WW) for a 33.2% return. She also cut KB Home (KBH), Pinterest (PINS) and Pioneer Natural Resources (PXD).
Have a Great Weekend!
Jim Giaquinto
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