Markets Live Recap: Why Stocks Gave Back Nearly Half of Yesterday's Rally

By Money Morning Staff Reports, Money Morning • May 19, 2020

Stocks failed to build off the positive momentum that fueled the rally yesterday.

Yesterday, Moderna Inc. (NASDAQ: MRNA) posted positive coronavirus vaccine data and U.S. Federal Reserve Chair Jerome Powell announced the Fed would digitally add more money to the system as needed.

Today, reality struck back.

Moderna announced it would be raising $1 billion of new stock to take advantage of its 20% surge yesterday. The stock dropped 10.4% today.

And you can add Howard Marks to the list of billionaire investors who think this market is overvalued after he said these "artificially supported" markets will fall when Fed aid slows. Consider his remarks another blow to the credibility of Jerome Powell.

Overall, the Dow fell 1.6%, the S&P 500 fell 1%, and the Nasdaq dropped 0.5%.

Here's what our experts - Chris Johnson and Shah Gilani - saw at the open and close of today's trading session.

Chris Johnson (8:45 a.m. EDT)

• The post Moderna Inc. saw stocks cool their jets from yesterday in pre-market futures trading.
• Chris is expecting a large number of retail earnings to disappoint this week, which may bring the market down.
• Chris is bullish on Home Depot Inc. (NYSE: HD) because people will likely remain home and continue working on their houses themselves.
  • He still has a $250 price target on the stock.
• Chris is bearish on Kohl's Corp. (NYSE: KSS), currently trading for $17.50.
  • He thinks it will be difficult for the stock to generate sales even in the post-pandemic economy.
  • Don't expect it to break through the $20 technical resistance level.
• Chris is looking for a pullback in the financials and small-cap sectors due to overbought conditions last week.

Shah Gilani (3:45 p.m. EDT)

• Shah still believes the worst is ahead of us.
• He thinks it was a smart business move for Moderna to issue $1 billion of fresh stock.
  • But after reading up more on the results of their new vaccine trial last night, he doesn't think it's conclusive that this drug will be the clear winner.
  • Investors must come to the same conclusion, and that's mostly why they sold today - after a 3.8% move to the upside yesterday.
• Tomorrow, Shah will be helping investors who join him live with their portfolio.
  • If you have a question about a particular stock, ask Shah here.

Catch us tomorrow - starting LIVE again at 8:45 a.m. EDT with Chris Johnson, right here.

If you missed our live streams today, you can now replay them on our YouTube channel here.

Got a question you want our experts to cover? Send us a note.

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