Equities started off with a bounce in the stock market today, but investors just couldn’t keep the momentum alive.
The S&P 500 slipped 4.3%, while the Dow Jones Industrial Average shed 913 points. The market had gotten into a habit of bouncing on Fridays, as bears did not want to stay short into the weekend. That wasn’t the case today though.
At this point, most of the rallies are small, and rarely do they last. Since the decline began a month ago, the S&P 500 has not had two consecutive days of gains. From peak to this week’s trough, the index is down 32.8%, in what has become one of the most aggressive bear markets investors have ever seen. Friday’s action doesn’t lend much confidence to the week to come.
The bright side? Equities are reacting a bit more constructively to negative headlines. That’s a start, particularly as stocks try to hammer out a bottom. But none of it is being done in constructive action thus far.
Movers in the Stock Market Today
AT&T (NYSE:T) has canceled its accelerated share buyback. The company originally agreed with Morgan Stanley to repurchase $4 billion during the second quarter, but will instead be using the money to “focus on continued investment in serving its customers, taking care of its employees and enhancing its network, including 5G.”
Shares sank more than 8% on the day and now yield more than 6%. AT&T was also on the Top Stock Trades list from Friday.
Coca-Cola (NYSE:KO) doesn’t expect to match its yearly guidance thanks to the coronavirus from China. While the company doesn’t see any issues in beverage production at the moment, management warned that it could see an earnings impact due to the current Covid-19 pandemic.
In more Coca-Cola news, the company will raise $5 billion of debt in five different installments. It will include a $1 billion 5-year debt offering, a $1 billion 7-year debt offering, a $1.25 billion 10-year debt offering, a $500 million 20-year debt offering and a $1.25 billion 30-year debt offering.
Altria (NYSE:MO) stock sank more than 7% on news that the company’s CEO Howard Willard tested positive for coronavirus and will be taking a temporary leave. William Gifford, Altria’s vice chairman will take over his duties for the time being.
Exxon Mobil (NYSE:XOM) executives are taking advantage of the stock hitting its lowest price in nearly two decades. Exxon senior vice president and principal financial officer Andrew Swiger paid about $1 million for 30,000 shares on Thursday. Additionally, Neil Duffin, president of Exxon Mobil Global Projects, bought 30,000 shares the day before.
3M Company (NYSE:MMM) just announced that it will be doubling its output of N95 respirators globally, in effort to keep pace with coronavirus demand. 3M plans to increase capacity globally by 30% in the next 12 months and will not be increasing prices at this time. The company will also be ramping up production of other products such as disinfectants, sanitizers and filtration solutions.
Buy the Dip Or?
Stifel analysts see a big relief rally in the cards. They expect the S&P 500, which closed at near 2,304, to rally up to 2,750 by the end of April. There’s still some time in there for more declines, but the outlook is rather optimistic. From Friday’s close, it would represent a rally of almost 20%.
On the flip side, we have Goldman Sachs. The economic team predicts that the economy will contract by a record 24% in the second quarter. Wow. Of all the quarters we’ve been through over the decades, who would have predicted this? If it comes to fruition, it will smash the prior record (under the current GDP measurement format), which was a 10% fall in the first quarter of 1958.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long T.