Wow, there’s a lot to unpack from the stock market today. On Monday, we saw a surge into the close, with the S&P 500 up over 4.5% and with the Dow Jones Industrial Average climbing more than 1,200 points. The latter enjoyed a record day as investors bid equities high. Today was a different tone, though.
On Tuesday, stocks started off higher on the day once again. This time though, they hit a huge patch of intra-day volatility. That’s after the Federal Reserve stepped in with a rate cut. However, it didn’t slash the Fed funds rate by 25 basis points. Instead, the Fed cut rates by 50 basis points.
That really got the attention of investors. Stocks were mixed after the announcement, but eventually turned lower. Bonds and gold, to no surprise, jumped on the news. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) hit new 52-week highs, although the SPDR Gold Trust ETF (NYSEARCA:GLD) couldn’t muster such a run.
Still, the 50-basis-point play took a lot of investors off guard. With the decision being unanimous, does it suggest the Fed is very concerned about the potential impact to the economy?
That’s one thought among investors. The other is that should we eventually need lower rates in the future to spur growth, we now have a lower starting point, potentially limiting the impact amid a true economic contraction.
With record low employment and a stock market that was at new all-time highs just a few weeks ago, we’re not really at a panic point in the economy.
Movers in the Stock Market Today
These are the types of declines that likely gets Warren Buffett excited. His Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) took the liberty to scoop up $45 million worth of Delta Air Lines (NYSE:DAL) last week, as the latter has been hammered over the past few days amid coronavirus from China fears.
Visa (NYSE:V) stock sank 3.4% after the company announced a revenue impact from the virus. Management expects a 2.5% to 3.5% hit to second-quarter revenue, and says the situation does not appear to have bottomed yet. As a result, they did not a provide full-year outlook, but will update investors when Visa reports earnings in April.
Target (NYSE:TGT) shares sank 3% after mixed earnings results before the open. Earnings of $1.69 per share beat estimates by 3 cents, but revenue and comparable-store sales missed expectations. Further, while gross and operating margins improved, they came up short of estimates. First-quarter and full-year earnings guidance was mostly in-line with the Street, but failed to wow investors amid this high-volatility environment.
As Chevron (NYSE:CVX) nears a 52-week low, management’s out with its long-term plan. Over the next five years, the company plans to return $75 billion to $80 billion to shareholders. Management also expects adjusted operating cash flow to grow 9% annually through 2024.
The rumors heated up about this one in the fourth quarter, but we finally have a deal between Thermo Fischer Scientific (NYSE:TMO) and Qiagen (NYSE:QGEN). The former will acquire the latter in a $11.5 billion deal, with the latter rising more than 14% on Tuesday in response.
Heard on the Street
As Ford (NYSE:F) shares creep lower, its yield continues higher. Now over 8.3%, Morgan Stanley’s Adam Jonas took a closer look. He says they see “great value” in the dividend in the short term. While covering the dividend will be strenuous, the current financials support it. In a downturn, that may not hold true, though.
Tesla (NASDAQ:TSLA) was one of our Top Stock Trades on Tuesday, as shares started off higher by 7%. Ultimately, they finished about flat, tormenting the shorts as the broader market slipped on the day.
In any regard, the stock was off to a hot start as JMP Securities upgraded the stock to “market outperform” from “market perform.” The analysts also assigned a price target of $1,060, arguing that the recent pullback is giving investors as buying opportunity.
Advanced Micro Devices (NASDAQ:AMD) continues to draw analysts’ attention. This time, it’s Piper Sandler, which upgraded AMD to “overweight” from “neutral.” They upped their price target to $56 from $45, also arguing that the recent decline is a buying opportunity.