Dow Plunges 650 Points as Coronavirus Cases Jump

It felt a little like the bad old days of February at times on Monday, as the Dow hurdled toward a 1,000-point loss due to a rise in coronavirus cases.

The pullback cooled off a bit by the close, but unfortunately this pandemic is not. New cases topped 80,000 twice in the past few days. The same thing is happening in parts of Europe as well, which suggests another wave may be upon us as we move into the colder months.

Sure would have been nice to have that stimulus package right about now. But no. The two sides are still talking, but we’re practically a week away from the election.

New cases and no stimulus led to sharp declines to start the week. The Dow is now in the red for October after slipping 2.29% (or about 650 points) to 27,685.38. However, it was down by more than 900 points earlier.

The S&P slipped 1.86% to 3400.97 and the NASDAQ was off 1.64% (or nearly 190 points) to 11,358.94. These indices are still positive for the month, but the S&P is less than 40 points away from joining the Dow in the red.

Obviously, the recovery stocks were hardest hit, such as Royal Caribbean (RCL, -9.65%), Carnival (CCL, -8.6%), United Airlines (UAL, -7.02%) and American Airlines (AAL, -6.35%) just to name a few.  

Last week, the NASDAQ and Dow were each down about 1% and the S&P slid 0.5%, which broke weekly winning streaks for each of the indices.

Let’s not forget, though, that this is a big week for earnings, and that the season has been pretty good so far.

Technology will be playing a big role in the coming reports with Microsoft (MSFT) and Advanced Micro Devices (AMD) both coming to the plate after the close tomorrow. (Make sure to check out Sheraz Mian’s recent report: Previewing Big Tech Earnings.)

And, of course, Thursday will be FAANG Day with Apple (AAPL), Facebook (FB), Amazon (AMZN) and Alphabet (GOOG) all scheduled to report after the bell.

Today's Portfolio Highlights:

Surprise Trader: Sometimes a stock’s earnings estimates will move higher, but it’s share price goes in the opposite direction. Dave likes to see this divergence, since it suggests that the market isn’t paying attention to the name... yet. Such is the case for Schneider National (SNDR), a leading transportation and logistics services company. Rising earnings estimates have made this company a Zacks Rank #2 (Buy). And now it seems set up for a beat with an Earnings ESP of 1.82% for the quarter coming before the bell on Thursday, October 29. It has beaten in the past two straight quarters. The editor added SNDR on Monday with a 12.5% allocation, while also selling the stagnant Herc Holdings (HRI) for a slight loss. Read the full write-up for more on today’s moves.

Black Box Trader: The portfolio replaced three names in this week's adjustment. The stocks that were sold today included:

• Walmart (WMT, +4%)
• Jabil (JBL)
• C.H. Robinson Worldwide (CHRW)

The new buys that replaced these names were:

• Hanesbrands (HBI)
• KBR, Inc. (KBR)
• Sealed Air Corp. (SEE)

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

Zacks Short Sell List: It's no surprise that this portfolio would be well-represented on the top performers list in a session when the Dow plunged over 600 points. That's what this service is all about... capitalizing on emotional moves in the market. On Monday, it had three names on the scoreboard. ConocoPhillips (COP) was the best performer among all ZU names by gaining 6.9%. StoneCo (STNE) and Twitter (TWTR) also made the list with advances of 5% and 3.8%, respectively. Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.

Options Trader: "But the growing number of coronavirus cases around the world, most notably in Europe where new shutdown measures are being considered, seemed to be the biggest weight on stocks.

"Even though the World Health Organization the other week came out against large lockdowns as doing more harm than good, targeted lockdowns are being talked about as alternatives. But nobody yet knows what that would look like and who would be affected. Whatever it looks like, it will be a setback to the EU's economic rebound.

"And with cases on the rise in the states, traders are wondering what that could mean for the U.S.

"Gladly, we are in a much better position now than when the virus first hit. The medical community knows far more about it than before. There's less fear of running out of supplies and resources. There are promising therapeutics in development, with some already available and in use. And a vaccine(s) could be ready by year's end." -- Kevin Matras

All the Best,
Jim Giaquinto

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