Across the board, U.S. equities, bonds and precious metals dropped significantly Tuesday as the bloodbath continued with the worst back-to-back days for the Dow in history, plus more in today’s Closing Bell on Money and Markets.
The Top Story
It started with all the promise of being a potential rebound day — and then it was all downhill once the bell rang.
Faster than U.S. market rose in the morning, they plummeted in the afternoon.
Minutes after the Centers for Disease Control put America on notice for a possible coronavirus outbreak Tuesday afternoon, markets nosedived for the second consecutive day.
“We are asking the American public to work with us to prepare in the expectation that this could be bad,” CDC official Dr. Nancy Messonnier told reporters on a conference call.
Investors started to pour money into bonds, but safe havens also experienced sharp declines. The benchmark 10-year Treasury yield hit its lowest point in history — 1.31%. It rose slightly in the afternoon to 1.33%. Gold and silver didn’t escape the free fall either (more below).
Bank stocks were hit particularly hard as lower rates threaten to cut into profit margins. Tech stocks like Apple Inc. (Nasdaq: AAPL) and Microsoft Corp. (Nasdaq: MSFT) were both down nearly 10% from their previous all-time highs.
The Dow Jones Industrial Average fell 3.1%. The S&P 500 lost 3% while the Nasdaq Composite fell 2.7%.
Money and Markets: Closing Bell*
S&P 500: 3,128 (-97 points, -3%)
DOW: 27,081 (-879 points, -3.1%)
NASDAQ: 8,965 (-255 points, -2.7%)
GOLD: $1,634 (-$25, -1.5%)
BITCOIN: $9,319.74 (-$285.40, -2.9%)
U.S. 10-YEAR YIELD: 1.33%
*- as of 4:15 p.m.
A Big Win
This morning, we told you that Moderna Inc. (Nasdaq: MRNA) was close to delivering a vaccine for the coronavirus. Shares of Moderna rose 27.8%.
While shares of Apple Inc. (Nasdaq: AAPL) moved up in the premarket session, it came right back down along with the markets in the afternoon as Apple shares fell 3.4%.
M&A News
Cornerstone OnDemand Inc. (Nasdaq: CSOD) has agreed to acquire Saba for $1.395 billion. Saba specializes in using artificial intelligence to help businesses recruit talent.
Snack company Mondelez International Inc. (Nasdaq: MDLZ) is acquiring a majority stake in sweet baked goods producer Give & Go. The acquisition is expected to close in Q2 2020. Terms of the deal were not disclosed.
Golden Nuggets
What goes up, must come down, and precious metals are no different.
After reaching more than $1,675 an ounce Monday, gold futures retreated Tuesday despite the losses in equities markets. Losses were attributed to “downside corrections in existing price uptrends.”
Gold futures were down 2.2% in the afternoon to just above $1,639 an ounce. Silver prices also fell sharply — 4.8% — to $17.96 an ounce.
Platinum futures were 4.5% lower to $930 an ounce while palladium jumped to $2,598 an ounce.
Cannabis Corner
The Journal of the American Medical Association reported cannabis use among older adults has increased dramatically in the last few years.
According to a research report, cannabis use among adults 65 years and older jumped from 0.4% in 2007 to 2.9% in 2016. By 2018, that number rose to 4.2%
Demographically, the highest use was among women, minorities and seniors who were married, college educated, had mental health issues and incomes of $20,000 to $49,000 and $75,000 or higher.
The study also found that cannabis use among seniors was also high with those who use alcohol Nearly 6.3% of seniors reported using both in 2018.
Stock Market Update
The coronavirus hit more than U.S. equities markets and bond yields Tuesday.
According to Mortgage News Daily, mortgage interest rates have fallen faster than Treasury rates.
The 30-year fixed mortgage interest rate dropped to 3.34%. The last time it reached that low was the summer of 2016. Prior to that, the rate had not reached that level since 2012.
“MBS (mortgage-backed securities) and/or mortgage rates ‘lagging’ the movement in the Treasury market is a blessing when Treasury yields are spiking, and actually also sort of a blessing when rates are falling — even though it might not seem like it at first glance,” Mortgage Daily’s Matthew Graham said in a blog post.
“Sounds great in theory, but in practice that causes all kinds of issues. Those issues, in turn, cause MBS valuations to take a hit. Those valuations, in turn, cause mortgage rates to move back up or cease their improvement, and suddenly, we’re right back to where we would have been if MBS simply lagged Treasurys in the first place.”
Today’s Big Winners:
HP Inc. (NYSE: HPQ) +5.6%
Regeneron Pharmaceuticals Inc. (Nasdaq: REGN) +4%
Xerox Holdings Corp. (NYSE: XRX) +4.6%
Keysight Technologies Inc. (NYSE: KEYS) +2.9%
NetEase Inc. (Nasdaq: NTES) +0.8%
Today’s Big Losers:
Occidental Petroleum Corp. (NYSE: OXY) -8.3%
American Airlines Group Inc. (Nasdaq: AAL) -9.1%
Marriott International Inc. (Nasdaq: MAR) -7.9%
American Express Co. (NYSE: AXP) -5.7%
United Airlines Holdings Inc. (Nasdaq: UAL) -6.5%
Check back for the most important news and numbers each day after the Closing Bell, only on Money and Markets.
Don’t forget about “Marijuana Markets: a POTcast,” featuring the biggest cannabis news and investment notes from Banyan Hill’s Anthony Planas, here on Money and Markets each Saturday morning.