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Stock Market Today: Mutant COVID Strain Puts a Scare Into Wall Street

·3 min read

The stock market provided a show of resilience Monday, finishing well off the lows of a trading day that, early on, looked like a stinker.

The biggest premarket scare came from across the pond, as dozens of countries shut down flights from the U.K. as that nation battles a mutant strain of COVID-19 that could be as much as 70% more infectious than most known strains.

Also weighing on the market is a potential "sell the news" event, with Congress poised to vote on a $900 billion stimulus bill – one that includes $600 checks (as opposed to the previous $1,200) for a smaller number of Americans than the original round of distributions.

"There did not appear to be many upside market catalysts in this bill, as we're still clearly in a precarious phase with the virus," says Brian Price, head of investment management for Commonwealth Financial Network, who also noted that "stretched valuations and sentiment indicators" contributed to the weakness.

Nonetheless, the Dow Jones Industrial Average, which had dropped as much as 423 points (1.4%) at its nadir, snapped back to a 37-point (0.1%) gain to 30,216 thanks to gains in Goldman Sachs (GS, +6.1%) and Nike (NKE, +4.9%), among others.

The S&P 500 (-0.4% to 3,694) and Nasdaq Composite (-0.1% to 12,742) also finished well off the lows.

Other action in the stock market today:

  • The small-cap Russell 2000 gained marginally to 1,970.

  • Gold futures declined 0.3% to settle at $1,882.80 per ounce.

  • U.S. crude oil futures dropped a sharp 2.9% to $47.74 per barrel.

stock chart for Dec. 12, 2020
stock chart for Dec. 12, 2020

A Short-Term Speed Bump for Value?

The passage of a stimulus measure will take one source of uncertainty off the table. In the short term, however, that might prove disruptive.

"New negative news about the virus could be enough to knock markets down and put the brakes on the overcrowded short dollar and growth-to-value rotations," says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

But Wall Street largely sees value rolling in 2021: BofA Global Research, for instance, calls value stocks "the new growth stocks." (Indeed, BofA issued a rare double upgrade in the value-priced energy sector, which bodes well for these nine stocks.)

We've been discussing this rotation into value for several weeks now, but there's oodles of value still on the table ... and just as many ways to capture that value.

The "safe" bet is to diversify through value funds such as these seven stalwarts, preventing calamity in any one stock from weighing too much on your returns. But if you're comfortable with single-stock bets, you'll want to consider these 15 value stocks. In addition to sporting cheap valuations compared to both their industrymates and their own historical metrics, they also provide above-average to downright generous dividend income.