Stocks suffered their biggest pullback in three months as another 1.5 million Americans filed for unemployment and coronavirus cases spiked in states that reopened parts of their economies.
Traders quickly moved to sell their positions as the Dow dropped 6.9% on the trading session.
Investors bid the S&P 500 45% higher from its March lows on hopes of a fast recovery. But a new spike in cases is certainly going to take a toll on a number of businesses.
Retail and airlines were two of the hardest-hit industries on the day.
Here's what our experts - Chris Johnson and Shah Gilani - think is going to happen tomorrow and how investors should be positioning themselves before the weekend.
Chris has been anticipating a pullback after the massive 45% rally stocks experienced since the lows made in mid-March. And now that we finally got it...
Here's how he thinks investors should be positioning themselves today:
Long bonds with the iShares Barclays 20+ Year Treasury Bond ETF (NASDAQ: TLT) or the iShares Barclays 7-10 Year Treasury Bond ETF (NASDAQ: IEF) because the Fed announced it plans to keep rates near zero through 2022.
Short the dollar using the Invesco Dollar Bearish ETF (NYSEARCA: UDN) as the Fed is forced to print more dollars to buy junk bonds and bail out companies on the verge of bankruptcy.
Short oil using the ProShares UltraShort Bloomberg Crude Oil ETF (NYSEARCA: SCO) as demand looks to remain low because of the increase in coronavirus cases.
Maintain hedged positions on the S&P 500 with inverse ETFs and put options on SPY.
Without any positive news, Chris expects markets to close on the lows and carry the downward trend through to tomorrow.
Shah thinks we're going to see tremendous volatility in the fall, during the election season, and after.
Zoom Video Communications Inc. (NASDAQ: ZM) (up 0.5% on the day) will likely continue its strong performance as the chances of another lockdown increased today.
$300 per share is possible.
Shah thinks gold (up 0.8% on the day) will continue to outperform as the Fed is forced to print more dollars to stimulate the economy.
Investors are slowly starting to prefer the deflationary nature of gold and its limited supply to the inflationary nature of U.S. dollars and its ever-expanding supply.
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.
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