The Dow Jones Industrial Average briefly fell more than 350 points early Monday on rising U.S.-China tensions due to China’s handling of the coronavirus outbreak. Dow Jones stock Apple tested a new buy point, while Boeing and Disney sold off.
Dow Jones leaders Apple (AAPL) and Microsoft (MSFT) tested recent buy points in today’s stock market. Amazon (AMZN) reversed higher to rise 1.5% after Friday’s 7.6% sell-off on earnings. Boeing (BA) and Disney (DIS) were among the worst performers on the Dow Jones industrials with drops of more than 3.5% each.
Dow Jones Today: Rising U.S.-China Tensions
The Nasdaq composite reversed from early losses to gain 0.4% Monday morning. At around 11:30 a.m. ET, the S&P 500 moved down 0.4%, while the Dow Jones industrials fell 0.9%.
At Sunday’s virtual town hall with Fox News, President Trump said he believes that China made a “mistake” and was the cause of the coronavirus outbreak. He said, “I think they made a horrible mistake and didn’t want to admit it.” Meanwhile, Secretary of State Mike Pompeo commented there is “enormous evidence” showing the coronavirus outbreak began at a biotech laboratory in Wuhan.
Last Thursday, President Trump said at a White House event that he could use tariffs to punish China over the coronavirus outbreak. The comments come in the aftermath of a Washington Post report about the White House starting to explore ideas for punishing China for its handling of the pandemic.
Among exchange traded funds, Innovator IBD 50 (FFTY) rose 1.5% Monday morning. The ETF of top growth stocks is about 20% off its 52-week high. Meanwhile, the Nasdaq 100-linked Invesco QQQ Trust ETF (QQQ) rose 0.4%, and the SPDR S&P 500 (SPY) ETF fell 0.6%.
Within the current stock market rally, the tech-heavy Nasdaq is down 4.1% year-to-date through Friday’s close. Meanwhile, the S&P 500 and Dow Jones Industrial Average are down 12.4% and 16.9%, respectively, through May 1.
Coronavirus News: U.S. Covid-19 Cases Near 1.2 Million
The coronavirus outbreak continues to spread across the U.S. According to the Worldometer data tracker, the cumulative number of confirmed U.S. cases approached 1.2 million Monday morning. Despite the rising total, the daily number of new cases remains steady amid the sharp increase in testing.
Confirmed Covid-19 cases worldwide climbed above 3.5 million, with more than 248,000 virus-related deaths. With the daily number of new cases in the U.S. stable, investors are turning attention to the economic impact of the coronavirus outbreak and the possibility of the country reopening for business.
On Monday, Florida became the latest state to reopen its restaurants with a 25% capacity restriction. Last week, Texas reopened its restaurants, malls and stores with a 25% capacity limit.
Coronavirus Stock Market Rally
According to IBD’s The Big Picture, the stock market remains in a confirmed uptrend after hitting lows in late March. The major stock indexes confirmed a new uptrend on April 2. According to Friday’s Big Picture, “The S&P 500 and Nasdaq penetrated below a trend line traced from the March lows. Both indexes also closed below the short-term 10-day moving averages. Those signals indicate the market may be changing direction, to the downside.”
Stocks to watch include the top stocks on IBD Long-Term Leaders. The IBD Long-Term Leaders list focuses on companies with stable earnings growth and price performance.
Dow Jones News: Boeing, Disney
Airplane maker Boeing stumbled 4.1% after Berkshire Hathaway (BRKB) sold off its entire stake in Delta Air Lines (DAL), United Airlines (UAL) American Airlines (AAL) and Southwest Airlines (LUV), as the industry faces a 95% drop in air travel.
Boeing stock is more than 66% off its 52-week high amid its steep plunge during the coronavirus stock market crash.
Early Monday, Disney fell 3.7% after being downgraded from buy to neutral at MoffettNathanson. According to analyst Michael Nathanson in the research report, “Our Disney downgrade is also an admission that we believe the economic impact on the company will be longer than most anticipate, especially given the risks of a second wave of infections after reopening.”
The Dow Jones media giant will report its quarterly results on Tuesday after the stock market close. The company is expected to earn 83 cents per share, down 49%, on sales of $18.03 billion, up 21% vs. the year-ago period, according to the IBD Investing Action Plan.
Disney stock remains more than 30% off its 52-week high, according to MarketSmith chart analysis.
Amazon Stock Turns Higher
FANG stock Amazon fell more than 1% early Monday before turning 1.2% higher, following up on Friday’s 7.6% sell-off on earnings. Amid Monday’s solid gain, Amazon stock is up 6% from a 2,186.05 buy point in a cup base after a breakout on April 14. Shares hit a new high on April 30, rising as much as 13% past the buy point.
Dow Jones Leaders: Apple, Microsoft
According to the IBD Stock Checkup, Apple stock has a 91 out of a best-possible 99 IBD Composite Rating. The Composite Rating is designed to help investors gauge the quality of a stock’s fundamental and technical metrics.
Apple is on the IBD Leaderboard watchlist. According to Leaderboard commentary, “The stock broke out in soft volume but that can happen sometimes with megacaps. The relative strength line is at new highs, a plus. The base is second stage.”
Microsoft reversed from early losses to rise 1.8% Monday morning and is trading in a buy range above a 175.10 buy point in a double bottom, according to MarketSmith chart analysis. From another perspective, the stock is trying to break out past a 180.10 buy point in a cup-with-handle base.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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