Dow, S&P Now Negative for 2020

The coronavirus had its biggest market impact yet on Friday as the Dow and S&P are now negative for the year on fears that the world’s second-biggest economy will be isolated from the rest of the world.  

It feels like the seriousness of this sickness has really ramped up in the past few days with the World Health Organization calling it a global health emergency yesterday and the U.S. doing the same today. Meanwhile, it continues to spread.

According to the Trump administration, the danger for the U.S. remains low with only 6 confirmed cases so far but one person-to-person transmission.

In order to keep it under control though, they announced several measures today, including quarantining U.S. citizens coming from the epicenter in China and denying entry to certain foreign nationals.

And this was after United, American and Delta airlines all announced plans to suspend flights between the U.S. and China.

Investors are concerned that the impact the coronavirus has on China will be felt throughout the globe… and they obviously didn’t want to be too involved in the market heading into the weekend.

The result was the sharpest plunge we’ve seen in months. The NASDAQ slid 1.59% on Friday… and that was the best performance of the day! It was down 148 points to 9150.94 and is the only major index still on positive ground for 2020.  

Despite all the craziness and fears today, shares of Amazon still jumped 7.4% after easily beating expectations in its quarterly report last night and becoming the latest trillion-dollar company. It’s performance probably helped the NASDAQ fare better than its counterparts.

The S&P dropped 1.77% to 3225.52, while the Dow plunged 2.09% (or about 603 points) to 28,256.03. These drops ruined the strong start to January and, therefore, leave the indices heading into February with losses for the year.

Eventually, investors will see a buying opportunity as many were hoping for a pullback in this hot market, but not right now in front of a weekend where hundreds more could be infected with this sickness.

So for now, let’s just appreciate our health, enjoy the Superbowl and hope that things look better when we get back to work on Monday.

Today's Portfolio Highlights:

Technology Innovators: The portfolio ditched its two weakest names on Friday by selling Amkor Technology (AMKR) and SVMK (SVMK). Brian immediately replaced one of those open positions by adding Sanmina (SANM), a Zacks Rank #1 (Strong Buy) provider of electronics contract manufacturing services. The company has already reported quarterly results, beating on both the top and bottom lines while offering an inline guidance. The editor says SANM has a “great” valuation and thinks its extraordinarily low price-to-sales of 0.3x will improve with more earnings beats. Read the full write-up for more on today’s moves.

Surprise Trader: The portfolio ends this busy week of earnings season by adding E.L.F. Beauty (ELF) with a 12.5% allocation. This cosmetics company has a positive Earnings ESP of 2.85% for the quarter coming after the bell on Wednesday, February 5. Dave also decided to sell BlackRock (BLK) for a 2.7% return. By the way, recent addition Adient (ADNT) soared 33% today on an otherwise horrible day for the market. Read the full write-up for more on today’s action.

TAZR Trader: If China knew how easy it was to spread the coronavirus in early December, then that further supports Kevin’s theory that the market is not ready for this thing to keep doubling every few days. Therefore, the editor added ProShares UltraPro Short S&P 500 ETF (SPXU) on Friday to take advantage of further downside in the index. He also sold a third of CrowdStrike (CRWD) for a 22.2% return in a month. He’s still hanging onto 5%. See the full write-up for more specifics on today’s moves.

Value Investor: "Stocks sold off big to end the month. There's simply too much uncertainty out there which Wall Street hates.

"All investors should have a plan. I'm sure there are some stocks that, a few weeks ago, you were saying, "if only it would pull back, I would buy it," but you didn't have the chance because shares kept going up.

"The next week or two may be your chance. Have a list of your favorites and watch prices.

"I'm hoping to buy some top names on sale in February.

"Otherwise, it's wise to just hang on tight right now and be patient." -- Tracey Ryniec

Have a Great Weekend,
Jim Giaquinto

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