The Dow Jones Industrial Average plunged Friday, along with the S&P 500 and Nasdaq. The coronavirus stock market correction intensified Thursday, with the Dow Jones and other major indexes all falling more than 4%. The U.S. is monitoring thousands of people in California for possible Covid-19 infections, while coronavirus cases continued to spread.
XApple stock, Amazon.com (AMZN), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) were among the big-cap losers Thursday. And all are set to retreat significantly on Friday, with Tesla stock and Nvidia set to test key support.
Microsoft stock plunged 7% on Thursday, knifing below its 50-day line after the software giant warned on the coronavirus late Wednesday. Apple (AAPL), which had its own coronavirus warning last week, tumbled 6.5%. Amazon stock fell 4.8%, below its 50-day line and erasing all its post-earnings gains. Nvidia stock skidded 5.6%, though it did hold above its 50-day.
Tesla retreated 13% Thursday on news that its electric vehicle registrations in China tumbled 46% in January vs. December, largely before the coronavirus crisis ramped up. TSLA stock is down 29% this week. But that follows 12 straight weekly gains for Tesla stock.
Axon Enterprise (AAXN), Beyond Meat (BYND), Autodesk (ADSK), Trade Desk (TTD) and Workday (WDAY) were among the notable earnings reports late Thursday. Shares of Axon Enterprise, Beyond Meat and Autodesk fell. Trade Desk rose.
Apple stock, Amazon, Nvidia and Tesla are all on IBD Leaderboard. Nvidia and Microsoft are on the IBD 50.
Dow Jones Today
The Dow Jones Industrial Average fell 2% Friday morning. The S&P 500 also was off 2% and the Nasdaq fel 1.9% after paring even larger losses.
St. Louis Fed President James Bullard said a Fed rate cut is possible only if the coronavirus becomes a pandemic. Investors have fully priced in a rate hike at the mid-March meeting, with buzz building for an emergency intrameeting cut.
Like regular trading sessions, Dow Jones futures have been volatile over the last several days. That's typical in a stock market correction. The stream of coronavirus news at all hours adds to that. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Tesla Stock Leads Big Tech Losses Overnight
Tesla stock sank 5% after the open, with its 10-week moving average coming into play. The 10-week line would be a natural area of support.
Apple stock, Microsoft and Amazon all fell 1.5% to 3% after their big Thursday losses. Nvidia fell 1.4% and is testing its 50-day line.
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Coronavirus News
California said Thursday that it's monitoring 8,400 people for potential coronavirus infections. That came after the CDC late Wednesday confirmed the first U.S. coronavirus case of unknown origin in California. That brought the U.S. total to 60 confirmed cases.
Meanwhile, South Korea, Italy and Iran continued to see big increases in Covid-19 cases. Korea cases now top 2,300. Nigeria reported its first coronavirus case, the first in sub-Saharan Africa.
Germany reportedly has quarantined 1,000 people.
While the vast majority of coronavirus cases are in China, more new infections are outside that country. Confirmed cases worldwide have topped 83,000 with global deaths above 2,850.
Moody's now sees a 40% chance of a Covid-19 pandemic, up from 20%. That would fuel a U.S. and global recession.
United Airlines (UAL) said that it was slashing Asia flights due to the coronavirus.
Coronavirus Stock Market Correction
The current stock market correction gave the market its worst day in years, closing essentially at session lows as the vertical violation showed no signs of pause.
On Thursday, the Dow Jones Industrial Average plunged 4.4%. The S&P 500 index also sank 4.4%, joining the Dow Jones in undercutting its 200-day. The Nasdaq composite tumbled 4.6%.
Apple stock and Microsoft are members of the Dow Jones, S&P 500 and Nasdaq. Amazon stock and Nvidia are S&P 500 and Nasdaq members, while Tesla stock is a Nasdaq big cap.
Travel-related stocks continue to be hammered, but investors are also dumping restaurants, ride-hailing companies and basically anything that involves meeting with groups of people.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slid 3.5%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 4.2%, with Microsoft acting as a drag. The VanEck Vectors Semiconductor ETF (SMH) skidded 4.6%, with Nvidia among the notable weights.
Stock Market Bounce Overdue?
Is the stock market correction oversold? After a slew of heavy losses, the major indexes are due for some sort of bounce.
Fear gauges also are at extreme levels. The put-call ratio jumped to 1.21, a recent high. The Cboe Volatility Index spiked to its highest level since February 2018.
Those all point to a stock market rebound, but it doesn't have to happen right away. When there is a bounce, that doesn't mean investors should rush in. Some of the best one-day percentage gains come in stock market corrections or bear markets. Again, the coronavirus complicates the process. A stock market rally attempt could be underway when news breaks of a big new virus outbreak.
Investors might be tempted to jump back in after an encouraging intraday S&P 500 gain or rising Dow Jones futures. It may be best to wait for a follow-through day to confirm a new stock market rally.
In the meantime, investors should try to stay engaged, by building and updating watch lists. The big gains come in the first few weeks after a stock market correction.
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Key Earnings
Beyond Meat stock fell sharply overnight after the fake-meat leader reported a surprise 1-cent loss. Sales growth topped views. BYND stock gapped back below its 50-day line. Speculative names like Beyond Meat, Virgin Galactic (SPCE), Plug Power (PLUG) and Tesla stock have come under pressure in recent sessions.
Axon Enterprise earnings and sales topped quarterly views, but guidance was a little light for the Taser and body camera maker. Axon stock fell below a buy point after closing just below its 50-day line.
Autodesk earnings topped views but the design software maker's outlook was weak. ADSK stock fell 2% at the open. Autodesk had already round-tripped a strong rally back below a 181.46 entry.
Trade Desk stock jumped on better-than-expected results. TTD stock had fallen for six straight days, undercutting its 50-day line and invalidating a prior buy point.
Workday earnings and subscription revenue cleared views. WDAY stock fell modestly. But Workday stock has had a failed breakout and knifed below key support levels during a seven-day losing streak.
Please follow Ed Carson on Twitter via @IBD_ECarson for stock market updates and more.
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