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Stocks Plunge More Than 1.5% on Coronavirus Fears

Jim Giaquinto
·3-min read

The coronavirus continues to spread around the world, and so too does the market’s concern that this sickness will hurt the global economy.

It’s already impacted our major indices. The Dow is now negative for the year and we’re coming back from the first losing week of 2020.

There are more than 2800 cases and over 80 deaths in China from the coronavirus. And the U.S. has 5 confirmed cases with several others being watched.

Stocks have been worrying about this since coming back from the MLK holiday last Tuesday, but today’s drop was by far the worst.

The NASDAQ started a busy week for tech earnings with a plunge of nearly 1.9% (or about 175 points) to 9139.31.

The Dow didn’t see a green session at all last week, and is now in the red for the year after a drop of 1.57% (or nearly 454 points) to 28,535.80. The S&P was also lower by 1.57% to 3243.63.

We haven’t seen declines like this in a while. The S&P hasn’t dipped by more than 1% in several months, which underscores the uncertainty that the coronavirus brings in a market that’s been feeling pretty good about things for a while.

The airlines and travel companies were among the biggest losers of the day, as they stand on the front lines of this sickness’ impact on the economy. However, the importance of China on the global stage means this outbreak will have a wider reach.

Then again, maybe the virus is close to peaking and we'll be back to normal sooner than expected. Let’s keep hoping for that outcome!

Earnings season was kind of ruined last week because of all the concern, and it looks like it might be overshadowed again.

Although, it will be tough for the market to completely ignore reports from the likes of Apple (tomorrow), Facebook, Microsoft (both on Wednesday) and Amazon (Thursday).

So here we go. We’re starting the final week of January with tons of uncertainty floating around. Let’s see what happens…

Today's Portfolio Highlights:

Surprise Trader: A new, even busier week for earnings starts today, and Dave kicked things off by adding automotive seating supplier Adient (ADNT). The stock reports before the bell on Friday and has an Earnings ESP of 40.69%. That’s the highest number the editor has seen in a while. He added ADNT on Monday with a 12.5% allocation. The portfolio also sold Forestar (FOR) for a slight loss after a rough morning. Read the full write-up for more on today’s moves.

Healthcare Innovators: The portfolio is buying a couple of innovative leaders in their industries that have each pulled back about 8% from their recent all-time highs. Shares of heart valve replacer Edwards Lifesciences (EW) dipped ahead of its quarterly report on Thursday on fears that TAVR procedure growth slowed last quarter. But Kevin thinks this is just a “temporary blip”, so he started a position today and advised to add more if the stock continues to decline.

Meanwhile, Intuitive Surgical (ISRG) moved lower despite beating on both the top and bottom lines last week, due to rising investment operating expenses. The editor sees this as a good time to get in as the trends in robotic and assisted surgery are still in the early stages. Learn a lot more about today’s buys, including the institutional investors that are expecting big things from these names.

Black Box Trader: This week’s adjustment included three changes. The portfolio sold the following:

• Citigroup (C)
• WESCO Int’l (WCC)
• Carnival Corp. (CCL)

The new buys that filled these positions include:

• Caesars Entertainment (CZR)
• Diebold Nixdorf (DBD)
• WPX Energy (WPX)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

All the Best,
Jim Giaquinto

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