Before The Bell - The stock market, which has been in a steep descent in recent weeks as fears about the fast-spreading and deadly coronavirus have proliferated, saw a modest break from this frenetic activity yesterday. There still was elevated volatility, to be sure, but the highs and lows were much more contained than they had been. Looking at the day's action, the Dow Jones Industrial Average began the session with a quick drop, which saw the composite fall to a loss of more than 700 points.
But that deficit, reached in the first few minutes, did not remain in place for long, and soon the key averages, especially the tech-driven NASDAQ, began a nice rebound. So, as the first 90 minutes, or so, passed, the market was back modestly in the green, where it would stay through the first part of the afternoon. At that point, the equity market would commence a somewhat steady climb higher into the mid-afternoon, when it would reach session highs, as the Dow would advance by some 600 points.
Our sense is that rather than surge of optimism, the session's better showing (the advance would falter some late in the day, but the averages would still close higher) may have in part been reflective of an exhausting of the recent selling. The modest buying also might have been the result of still stronger actions being undertaken by the federal government. Still, the news from the disease front was not compelling, as worldwide cases were closing in on 250,000.
Meanwhile, the news on the coronavirus front was not good, nor were the disease projections. To wit, U.S. cases now exceed 13,000 and deaths are approaching 200. Moreover, California now projects that more than half of its immense population will fall victim to this illness in the next eight weeks. Despite all this, the stock market would finish higher on the day.
All told, the Dow would add 188 points on the day; the S&P 500 would tack on 11 points; and the NASDAQ would jump 161 points. Better still, the Russell 2000 would surge by 68 points, as many small-cap stocks would make dramatic recovery moves. Also positive was a big jump in oil prices on the session. However, after trading ended, the futures would fall back in after-hours trading, quickly losing about 400 Dow points. Now, in pre-market trading, the futures are pointing to higher opening. - Harvey S. Katz, CFA