(Photo by Spencer Platt/Getty Images)
Spencer Platt/Getty ImagesThe Dow Jones Industrial Average dropped almost 1,000 points as coronavirus continues to infect the stock market.
The Dow started the day down around 700 points, but seemed content to hold around there through the morning. It wasn’t until early afternoon that investors decided that the stock market needed to fall even more.
It certainly hasn’t helped that California declared a state of emergency after its first coronavirus death, while the disease looks to be spreading in New York state as well. Coronavirus also spread into new countries around the globe, including Chile.
All this makes Wednesday’s rally seem a little, well, silly. Wells Fargo strategist Christopher Harvey attributes the first 1% to 2% rise as being about Joe Biden, something that “made intuitive sense. The stock market didn’t stop there, however. It continued rising, with the Dow finishing the day up 4.5%. Some attributed it to Congress’s agreement to send $8.3 billion to battle the disease, but Harvey was at a loss to identify actual buyers.
“Some derivative traders suggested hedge funds were covering SPX shorts. Cash traders scratched their heads ‘more buyers than sellers!’) and suspected more buyback volume. ‘Fast-money’ Quant funds said it could have been us on Friday, but not today—they rarely give a straight answer...A majority suspected CTAs, but AUM is not what it used to be. The risk-parity folks said don’t bother us,” Harvey wrote. “The final word: Lots of finger pointing and confusion.”
And it wasn’t as if we didn’t know that coronavirus would be spreading, which is why Harvey told clients “Do not chase.”
No one’s chasing now.
The Dow slumped 969.58 points, or 3.6%, at 26,121.28, while the S&P 500 dropped 3.4%, and the Nasdaq Composite fell 3.1%. The U.S. 10-year Treasury yield has fallen 0.072 percentage points to 0.92%.
Write to Ben Levisohn at Ben.Levisohn@barrons.com
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March 06, 2020 at 04:44AM
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Dow Jones Industrial Average Drops 996 Points as Coronavirus Keeps on Spreading - Barron's
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