Coronavirus Drags Wall Street Into The Red

All three benchmarks are headed for sharp weekly losses

Patrick Martin

Managing Editor

Feb 21, 2020 at 12:44 PM

The coronavirus really made its mark on Wall Street this holiday-shortened week. The outbreak that has gripped global headlines for all of 2020 has the Dow, S&P 500, and Nasdaq all pacing for substantial weekly losses. After Apple (AAPL) issued a guidance warning related to coronavirus headwinds, the Dow rattled off three straight sessions in the red, although the S&P 500 and Nasdaq did manage to nab record highs on Wednesday. Amidst the panic, the Cboe Volatility Index (VIX) roared to life, as did gold futures.

COVID-19 Panic, TSLA, SPCE Stay Hot

Lost in the kerfuffle of the coronavirus panic was another week packed with corporate reports. Call traders piled on Domino's Pizza (DPZ) after an earnings beat led to its best day ever. Avis Budget (CAR) was another big winner, and options bulls responded in kind.

Walmart's (WMT) turn in the earnings confessional left a lot to be desired, and COVID-19 fears playing a big part. And that could just be the tip of the iceberg; global icons such as Coca-Cola (KO) are already updating their current-quarter earnings projections to account for the virus.

Elsewhere on Wall Street, Tesla stock picked up a huge bull note and resumed its joy ride to uncharted territory. E-trade Financial (ETFC) was bought out by banking giant Morgan Stanley (MS), Virgin Galactic (SPCE) continues its out-of-this-world ascent quite literally, and L Brands (LB) finally spun off Victoria's Secret.

Next Week: GDP Data, and Volatility Points to Watch

Going forward, gross domestic product data will highlight the final week in February. As referenced above and last week, keep an eye out for companies like Medtronic (MDT) who faced an earnings disappointment due to the coronavirus concerns.

Every day this week the Dow made triple-digit moves, regardless of direction. On Tuesday, we outlined a potential inflection point for stocks and bonds to keep an eye out amidst this volatility. And despite the lousy week, some historical data points to more upside for the S&P 500 in the coming months.

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