Assessing Coronavirus Carnage on Stock Markets, One Month Later

New York, N.Y. (PPD) — Traders on the New York Stock Exchange (NYSE) and around the U.S. are assessing the damage to the stock markets only one month after the coronavirus outbreak.

The European Central Bank announced a new €750 billion bond-buying program early Thursday morning to combat the coronavirus-related economic slowdown.

European markets have only moderate gains of +1% to +3%  a couple hours into European trading.

Oil prices traded at an 18 year low, barely holding the benchmark $20 level.  Early this morning Oil is having a reflex rally, trading in the $22 – $23 range.

U.S. Treasury yields continue to move higher as the yield curve continues to steepen. The U.S. 10-Year T-Note (US10YTN) hit a yield of 1.26% overnight. At 7:00 AM EST the yield has backed off to 1.16%.

The Dow Jones Industrial Average (^DJI) closed below the psychological 20000 level for the first time since Groundhog Day 2017 (seriously, look it up!). Closing at 19,898.92, the DJIA lost -1,338.46 or -6.3%. If you’re looking for a green shoot, the DJIA rallied nearly 1000 points off its intra-day low during the last 90 minutes of the trading day.

The DJIA has declined -32.7% since the high of 29,568 five weeks ago.

The S&P 500 (^SPX) declined -131.09, or -5.2% to close at 2398.10. Rallying over +5% in the last 90 minutes, the S&P 500 held its December 24, 2018 close of 2351. The index also closed more than +2% above where the market wide circuit breaker triggered a 15 minute trading halt minutes before 1:00 pm.

On any “back and fill” action the next few days, watch the 2,350 level, and below that, 2,280 as a test of near term technical support that should hold, if Wednesday is to mark a tradable low, at least going into the end of March and Q1.

The S&P 500 has declined -29% from its February 19 high of 3,386.15 one month ago.

The Nasdaq Composite (^IXIC) fell -335 points, or -4.7% to close at 6,989.84. This is slightly higher than the Monday close of 6,904.59. The NASDAQ is still +13% higher than the December 24, 2018 close at 6,192.92.

If you’re looking for near term resistance on any reflex rally, the intraday highs of 7,422 and 7,406 from Monday and Tuesday of this week are right in line with the dual reaction lows of 7,411.52 and 7,333.02 from March 8 & June 3, 2019.

The NASDAQ composite has declined -29% from its high of 9817.18 one month ago today.

The Russell 2000 (^RUT) at 991.16, has had the most dramatic decline over the last month, declining a mind boggling -41.5% over the last month. On February 20, the Russell closed at 1,696.07, its second highest close over the last 18 months.

The Early Line

With stock index futures trading -1% to -2% lower in early trading, we may challenge the intraday lows from earlier this week. That being said, wild price swings have become the norm over the last 3 weeks.

Clearly, most investors and traders will take their cue from the late morning White House briefing, as well as movement from congress on National Assistance Legislation.