D&D Note (6.26.2020) ~ Markets Selloff Due To Increasing Covid-19 Cases ~
Markets immediately after opening gave back all gains from yesterdays late day rally (perhaps late day short covering causing yesterdays last minute heroics). Throughout the day stocks drifted lower and lower. The major indices all closed on the lows of the day.
The negative developments from Covid-19 in southern and western states has caused the markets to reprice equities discounting a harder reopening than previously hoped.
Bars have seemed to be epicenters of Coronavirus outbreaks in Texas and Florida. Today both states closed back down the bars. Direct correlations between Open Table reservations and resulting virus case spikes is bad news for restaurants as well.
Many people who had been relying on going back to work in the service industry might now in many states have to go back on unemployment. The same time the additional benefits are about to expire.
New data is showing that more people are testing positive under the age of 35. While this temporarily lowers mortality rate its increasing community spread to older and vulnerable people.
Positivity rates are going up showing it’s not just a result of more testing and hospitalization rates are going up showing there are more people devoloping serious symptoms.
Markets have also now started repricing based on the need for further government stimulus from another wave of unemployment.
Two major things that can bring down stocks is when the FED begins reducing its balance sheet and the reduction of consumer spending.
Banks were under pressure today after the FED announced it was banning banks from buying back stock in the 3rd quarter along with capping dividends in the 3rd quarter to no more than paid out in 2nd quarter.
Facebook and Twitter both fell over 8% today on news Unilever and Verizon are pulling spend through 2020. Coca-Cola also announced it is suspending all social media platforms globally for 30 days.
Microsoft announced they will be forever closing all their physical stores highlighting worries about future commercial property.
DOW down -2.84%
S&P 500 down -2.42% (3009.02)
NASDAQ down -2.59%
VIX up 7.73% to 34.71
Oil down -1.21% to $38.25 a barrel.
Gold up 0.75% to $1784.00
US virus cases rise 1.7% higher than 7-day average of 1.5%.
The White House task force holds first briefing in nearly two months. Tale of two stories where VP Mike Pence painted a rosy picture while Dr. Fauci pleaded with Americans to wear masks and practice social distancing.
Global Virus cases: 9.76 million+
Global Virus deaths: 492,807+
US Virus cases: 2.46 million+
US Virus deaths: 124,978+
~ Dave James / Principal Trader and Market Strategist