Dow Logs Worst One-Day Slump In History: ETF & Stock Winners
Zacks Investment Research | Feb 28, 2020 01:00AM ET
Wall Street went into a tailspin in the final days of February, withU.S. stocks losing for weakest year since the 2008 financial crisis due to increased lockdowns, restrictions on global travel and lower manufacturing activity in China. Also, Goldman Sachs (NYSE:GS) slashed its outlook for U.S. companies’ earnings growth to zero.
As a result, global markets lost $1.83 trillion on Feb 27, with the U.S. markets shedding $1.33 trillion, S&P Dow Jones’ Howard Silverblatt said in an email. Over the past six days, global markets lost $6 trillion with U.S. markets seeing an outflow of $4 trillion.
Why Dow Jones Has Lost the Most
Dow Jones can easily be considered the most trade-sensitive index in the U.S. market. With China grappling with coronavirus, several cities on lockdown and extreme trade and travel restrictions, the effect of the phase-one U.S.-China trade deal may not be realized in the near term.
Then, Boeing (NYSE:BA) has been a constant pain for the Dow Jones. Boeing holds 7.68% of the fund DIA, securing the top spot. So, the company’s performance matters a lot. Its stock is down 13.7% this year (as of Feb 27, 2020), having suffered extensively due to the 737 MAX jetliner crisis. The cost of grounding 737 MAX after two fatal crashes continues to rise. Most recently, the Federal Aviation Administration (FAA) developed an airworthiness directive requiring all Boeing 737 MAXs to fix the manufacturing defect. Also, there is no hope for Boeing’s near-term recovery.
Furthermore, it has been noticed lately that the Dow Jones shares a deep relationship with oil price movement. Though the energy sector rally has spread optimism in the broader market as a whole, in most cases, on a particular day of oil surge, the spurt in the Dow Jones is steeper than that of the S&P 500, or vice versa. With coronavirus raising alarms for global growth, crude oil prices are in a tight spot. United States Oil Fund (NYSE:USO) LP Virus Scare Weighs on Oil ETFs: Go Short for the Near Term ).
What You Need to Know about Dow Jones-Based ETF & Stocks
Yesterday’s slump was mainly caused by Microsoft (NASDAQ:MSFT) (down 7.1% on Feb 27). The tech giant revised revenue guidance on the virus fear. Dow Inc. (NYSE:DOW) (down 6.6%), Apple (NASDAQ:AAPL) (down 6.5%), Intel (NASDAQ:INTC) (down 6.4%) and Exxon Mobil (NYSE:XOM) (down 6.0%) also lost heavily (read: Microsoft Revises Sales Guidance on Coronavirus: ETFs in Focus ).
On the other hand, 3M Co. (NYSE:MMM) (up 0.8%), Pfizer Inc. (NYSE:PFE) (down 1.79%), Merck & Co. Inc. (NYSE:MRK) (down 2.33%), Walmart Inc. (NYSE:WMT) (down 2.97%) and Walgreens Boots Alliance Inc. (NASDAQ:WBA) (down 3%) were the top performers. Amid the rising virus-related scare, healthcare stocks were expected to fare better than other sectors. Consumer Staples like Walmart also benefitted from its presence in a relatively safe sector.
Get The News You Want
Coming to ETFs, SPDR Dow Jones Industrial Average (NYSE:DIA) ETF Trust (TSXV:DIA) lost 4.54% on Feb 27. So, investors intending to play against the tumbling Dow Jones, may tap ProShares Short Dow 30 Coronavirus Triggers Market Bloodbath: 7 Hot Inverse ETF Areas ).
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