The Dow Jones Industrial Average dropped more than 600 points at open today. This comes after a three-day stretch that technically ended the bear market.
However, it's clear that we're witnessing a head fake for the markets. Investors now face a significant challenge on the horizon as the U.S. economy shuts down to address the spread of coronavirus.
Here are the numbers from Thursday for the Dow, S&P 500, and Nasdaq:
Index
Previous Close
Point Change
Percentage Change
Dow Jones
22,552.17
0.00
0.00
S&P 500
2,630.07
+154.51
+6.24
Nasdaq
7,797.54
+413.24
+5.60
Now let's take a look at what I consider to be the most important market events to start your day.
The Top Stock Market Stories for Friday
Johns Hopkins University said that the number of global coronavirus cases has jumped to 542,700. Of that total, roughly 86,000 are happening in the United States. UK Prime Minister Boris Johnson tested positive for the virus. Meanwhile, U.S. President Donald Trump and Chinese leader Xi Jinping held a phone call to explore ways to work together to address the global pandemic.
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This morning, the House of Representatives will vote on the $2 trillion stimulus plan passed by the Senate this week. According to reports, Rep. Thomas Massie (R-KY) opposes the deal and has threatened to demand a recorded vote. This would require at least 216 House members to be physically present to vote on the plan.
The White House is considering a plan that would allow the U.S. government to take a stake in airline companies that are seeking a bailout. However, reports indicate that the law might leave the cruise industry out of the bailouts given that they are not incorporated in the United States. That second factor raises a significant question about the future of the U.S. economy. Analysts expect that a significant amount of U.S. manufacturing and corporate boards will return to the United States as a result of this outbreak to address bigger, broader structural challenges exposed by the COVID-19 outbreak.
Stocks to Watch Today: KBH, GPS, M
KB Home (NYSE: KBH) shares rallied 3.5% on Friday after the company topped Wall Street earnings expectations before the bell. The homebuilder reported earnings per share of $0.63, a figure that beat forecasts by $0.18. The homebuilder said that orders increased by 31% year over year, with a 28% gain in deliveries. That said, the firm did withdraw its 2020 outlook due to the growing uncertainty around COVID-19.
The downgrades have begun. This morning, Moody's downgraded the credit ratings of Gap Inc. (NYSE: GPS) and Macy's Inc. (NYSE: M) to junk status. The news comes the same day that Gap withdrew its 2020 forecast and announced that it would suspend its dividend. The company also said its stores will remain closed at the same time that it drew down its entire $500 million credit limit.
Cheesecake Factory Inc. (NASDAQ: CAKE) is generating a lot of buzz this morning on news that it won't be able to pay rent at its locations around the country. The firm filed a report with the U.S. Securities and Exchange Commission detailing its plans to slash corporate pay by up to 20%, furlough 41,000 hourly employees, and address its rent obligations.
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Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.