Stocks on Wall Street plunged Monday, but futures trading suggests a rebound — or a least a respite — on Tuesday.
Dow Jones Industrial Average futures
YM00, +0.28%
rose more than 200 points on Tuesday, while S&P 500 futures
ES00, +0.35%
gained 0.8% and Nasdaq Composite futures
NQ00, +0.56%
added more than 1%
A pause or bounce-back would not be unusual. The past 10 times that the S&P 500 index fell by as much as 3%, for example, it declined just 0.27%, on average, in the next trading session, according to Dow Jones Market Data.
Researchers at Bespoke Investment Group also said Monday that, over the past 11 years, declines of more than 2% for the S&P 500 have tended to see healthy rebounds, particularly when that daily slide happens on a Monday. “Since March 2009, there have been 18 prior 2%+ drops on Mondays, and SPY has seen an average gain of 1.02% on the next day (Turnaround Tuesday),” they wrote.
Crude oil prices, which tumbled 5% Monday, ticked up in electronic trading, with West Texas Intermediate crude for April delivery
CLJ20, -0.21%
and April Brent crude
BRNJ20, -0.12%
, the global benchmark, each up around 0.5%.
Gold prices
GCJ20, -1.25%
, which jumped 1.7% Monday to their highest point in seven years, slipped 1.5% to $1.651.80.
Asian markets continued to fall, with Japan’s Nikkei
NIK, -3.34%
— which was closed for a holiday Monday — last down over 3%. Australia’s S&P/ASX 200
XJO, -1.60%
fell 1.6%, though South Korea’s Kospi
180721, +1.18%
, which fell 4% on Monday, rebounded 1.1% on Tuesday.
Monday on Wall Street, the Dow finished more than 1,000 points lower, marking its third-worst daily point drop in history, as the global spread of the coronavirus raised worries that the impact on economic growth could be worse than investors expected, hurting the prospects for a global recovery in 2020.
The Dow Jones Industrial Average
DJIA, -3.56%
shed 1,031.60 points, or 3.6%, to settle at 27,960.80. The S&P 500
SPX, -3.35%
slumped 111.86 points, or 3.4%, to close at 3,225.89, and the Nasdaq Composite
COMP, -3.71%
off by 355.31 points, or 3.7%, to finish at 9,221.28.
Amazon is getting more serious about its brick-and-mortar retail ambitions with its first-ever Amazon-branded grocery store. The store opens today in Seattle’s Capitol Hill district, confirming reports from last year that Amazon was developing a more ambitious version of its cashier-less Go model. The new store, which The Verge toured late last week, is indeed modeled after a standard Amazon Go location, but it has been expanded to include a wide array of grocery items you’d find at, say, Amazon-owned Whole Foods.
In fact, the store does source a number of its items, including some produce and meat and other fresh food, from Whole Foods suppliers. It also carries Whole Foods’ 365 brand for certain items. But Amazon’s store offers other products, including breakfast cereal and soda, that you won’t find at Amazon’s higher-end, organic-focused subsidiary.
Amazon says the store combines the product availability and low prices of a grocery chain like Publix or Walmart with the convenience and quick shopping times of its Go model, with a selection that includes both big mainstream brands and local, organic produce. It joins the nearly 20 Go stores currently open throughout the country in cities like New York and San Francisco.
Amazon Go stores use overhead cameras and computer vision technology, paired with smartphone geofencing, to track both shoppers and items throughout the store. That way, the system can identify when a specific person has picked something off the shelf and placed it in their cart, and even when they decided to put something back.
The end result is that customers don’t have to sit through check out. When you’re done at a Go store, you just walk out and your receipt is sent to you through Amazon’s companion app. The same is true of Amazon’s new grocery store, which features shopping carts, but no checkout lanes or counters.
Amazon says its Go system has been trained to handle tricky situations that are unique to grocery stores, like customers handling unpackaged produce that looks similar and sits next to other fruits and vegetables or unboxed baked goods that might get stuffed into a single plastic bag. You can even buy alcohol by taking it off the shelf and walking out, although a human employee will have to check your ID before you enter the store if you intend to peruse the libations aisle.
Go stores have so far focused on prepared foods, snacks, and a light amount of grocery items including frozen food and condiments. Some have acquired licenses to sell alcohol, too. But no Go store to date has the size or scope of Amazon’s new Go Grocery, as it’s called. The location, at 610 E. Pike Street, is 10,400 square feet, while a standard Go store tends to fall between 1,200 and 2,300 square feet.
This grocery effort is starting small, Amazon’s Dilip Kumar, the company’s vice president of physical retail and technology, tells The Verge. Kumar says Amazon has no immediate plans to open more grocery stores. But if it succeeds, an Amazon-branded grocery store using its Go model, which allows customers to get in and out much quicker, could become a fast-growing avenue for the e-commerce giant to continue expanding its offline footprint.
And according to Kumar, Amazon Go Grocery is not intended to be competitive with Amazon’s Whole Foods chain, but complementary instead. “Customers shop in many different ways, in many different locations. Sometimes you want it to be delivered, some times you go to the store, some times you go to Whole Foods. Our job is to be able to figure out how to add value,” Kumar says. “Because the customer has different needs... and different things that they look for at different stores, what is it we can we do here in this type of format in this neighborhood to add value? That to me is the selection we carry, the pricing we have — plus the convenience of just being able to walk out.”
While Amazon dominates many sectors of online retail, it has yet to make large inroads into the much larger offline retail market, a large segment of which is related to food and beverage consumption. People spend $800 billion a year on groceries in the United States, of which only about 2 percent happens online. Amazon’s domestic retail rival Walmart currently leads the grocery market in volume, and Walmart’s huge retail footprint throughout the country has always put it in a strong position to sell customers everything else they might need on a shopping outing. The same is true of Kroger’s, the largest dedicated grocery chain in the country.
That’s because not only do a majority of people buy fresh food in person from grocery stores, they also use those same trips to buy household goods, alcohol, and a number of other products that a company like Amazon could more easily sell in-store than online. Although Amazon has services like Prime Pantry for selling bundles of household goods and a grocery delivery service called Amazon Fresh, it would be immensely difficult and costly to scale those services to reach every grocery shopper in the country. That’s why Amazon has been investing in brick-and-mortar retail in the first place.
That complexity inherent to the grocery market is why Amazon chose to brand its new store as a Go one, instead of choosing to bring its cashier-less Go model to an existing Whole Foods location. Amazon wants the freedom to sell people products from major brands they might find at a city bodega, a neighborhood CVS, or a Kroger store, and not just the organic and high-end ones Whole Foods sells today. That sets up Amazon to service a wider variety of customers: Go stores for the office lunch crowd, Go Grocery for the everyday residential shopper, and Whole Foods for the organic-minded and more affluent.
“This is not a bigger Amazon Go store. It’s a separate format. We worked backwards from what constitutes a neighborhood grocery store,” Kumar says. “We have a section for pet food, household items, health and personal care, oral care, skin care.” Kumar says that to satisfy the needs of a grocery store, you have to “go beyond food” and include those items that people might normally buy during a standard grocery outing, from paper towels and dish soap to shampoo and deodorant.
In addition to all that, the Go Grocery store has a bakery section, as well as a prepared meals and snack section similar to what you’d find in the smaller standard Go store. Amazon says it will also offer items from local Seattle businesses including pastries from Seattle Bagel Bakery, yogurt from Ellenos, and sausage from Uli’s.
Whether Amazon Go Grocery takes off is an open question, but the steady rollout of Go stores so far seems to suggest that the cashierless model has been a worthwhile investment for the company so far. Kumar says key for Amazon right now is making sure it’s doing something customers actually want.
“How big it gets and how fast it goes, customers get to decide that,” Kumar says.
In an interview just released on CNBC, billionaire financier Warren Buffett reiterated his long-held position that cryptocurrency has no intrinsic value, and made clear that he would never own any. Buffett insisted that Bitcoin serves no real purpose, which is why it has not achieved mainstream use.
WARREN BUFFETT STATES CRYPTOCURRENCY “DOES NOTHING”
The discussion centered on Buffett’s recent dinner with Justin Sun, who paid over USD $4 million for a dinner with Warren Buffett as part of a charity auction. Buffett noted that Sun and his other guests behaved very well, and the conversation was respectful. Nevertheless, Buffett insisted that the Tron founder failed to change his mind in any way on this subject.
It is worth noting that during the interview Warren Buffett makes a number of references demonstrating that he understands blockchain technology. He clearly understands the idea behind the digital ledger, as well as the fixed supply of Bitcoins. Also, when pressed on the idea that Sun gave Buffet some Bitcoin at the dinner, Buffet became visibly uncomfortable, and reiterated that he did not own any.
BLOCKCHAIN ASSETS REMAIN OUTSIDE LEGACY FINANCE
Buffet’s view on cryptocurrencies has remained consistent, and is unlikely to change. His stance is likely due to the fact that blockchain assets do not fall within the realm of traditional finance. In other words, they are too risky, and too disruptive, to be considered worthy investments.
As perhaps the most successful investor of the modern age, Buffett’s genius is without dispute. Nevertheless, his remarkable success has come from following a very short list of very conservative, simple strategies. He has long avoided new asset classes or highly speculative investment schemes. The fact that Warren Buffett has zero interest in crypto is thus not surprising.
Crypto advocates may deride the argument that Bitcoin has no intrinsic value, yet Buffett’s statement also points to the unresolved, and highly controversial, question of Bitcoin’s long-term status as the top platform. Whereas there is no doubt that that blockchain assets are here to stay, Bitcoin may very well fall out of first place. Buffett clearly understands this fact and has no intention of entering the debate.
Warren Buffett is one of many financial experts from the legacy space that have decided to avoid cryptocurrency. His decision to do so will not stop blockchain development or cryptocurrency investment. Also, his assertion that cryptocurrencies are extremely risky holds true. Thus, perhaps the best move for crypto advocates is to stop trying to change his mind.
What do you make of Warren Buffett’s latest comments on crypto? Add your thoughts below!
The worldwide death toll from the novel coronavirus has risen to 2,612.
February 24, 2020, 3:30 PM
5 min read
The Dow Jones Industrial Average plummeted more than 700 points on Monday as the number of coronavirus infections around the world have surged.
The S&P 500 and Nasdaq also tumbled Monday morning, by more than 2.6% and 3%, respectively.
As markets opened Monday, the Dow was down more than 900 points after reports that the worldwide death toll from the novel coronavirus had risen to 2,612. A vast majority of those deaths -- more than 2,500 -- were in China.
Outside of China, there have also been reports of the virus spreading rapidly in Japan, South Korea and Italy.
"The coronavirus might be slowing in mainland China, but the huge jump over the weekend to various other countries has many reassessing 2020 growth estimates," Ryan Detrick, the senior market strategist for LPL Financial, said in a commentary about Monday's market sell-off.
"The IMF already lowered China’s growth this year, but should the virus continue to spread to other parts of the world, we could see quickly decreasing earnings and growth outlooks," Detrick added.
Experts say the volatile market reactions show how much uncertainty still surrounds the outbreak of the novel coronavirus, officially named COVID-19.
"Markets were hit with renewed fears over coronavirus and the potential economic impact resulting from the shift of the viral outbreak being more of pandemic problem," Charlie Ripley, the senior investment strategist for Allianz Investment Management, said in a statement.
"The interruption to business and supply chains is becoming more prevalent as companies like Apple have already warned investors of the setback the virus has caused," Ripley added. "Additionally, we expect the transportation industry to be affected as travelers cancel flights, hotels and other travel arrangements. During past events of this nature we tend to see a relatively quick recovery, but markets continue to grapple with the uncertainty surrounding the coronavirus and the timing around the peak of its widespread harm to both human life and the economy."
Apple told investors last week that its worldwide iPhone supply will be "temporarily constrained" due to outbreak and that it does not expect to meet the revenue guidance it provided for the second quarter.
A handful of other U.S. and international companies have already begun to feel the financial impacts of the outbreak that has crippled the world's second-largest economy.
Coronavirus pandemic is the new buzzword on the Street. That’s a lot different than the word used by most on Wall Street throughout the breakout of the deadly disease up until this point: epidemic.
We aren’t at coronavirus pandemic levels just yet, which is good news for humanity. But investors have finally taken off the rose-colored glasses amid scores of new information from health officials and major companies, looked in the mirror and realized coronavirus is a more serious situation than first thought. And that needs to be priced into equities across the globe, and quickly.
Investors return to the market Monday to that happening — Dow Jones Industrial Average futures are plunging greater than 800 points. Gold has continued to get a bid, climbing to seven-year highs. The 30-year Treasury note has hit a record low and big-time risk off moves in equities have swept the globe. Traders have flooded into the U.S. dollar as a safe-haven, with the strength likely to add further pressure to multinational company earnings in the first quarter.
The weekend news flow on coronavirus has been brutal to say the very least, justifying the flight to safety Monday.
Italy’s confirmed coronavirus cases spiked to 150 on Sunday from three on Friday. The country has quarantined several cities in the hopes of preventing the spread of the disease. South Korea has reported hundreds of fresh infections. Iran has said at least 12 people have died. Meanwhile, the numbers of those infected continues to rise in China and Japan.
The thinking right now: no country is immune, and there could be greater downside risk to global growth estimates (which have already been falling...).
People wearing protective facemask are evacuated from the security zone where a bus comming from Milan is blocked at the train and bus station Lyon Perrache, due to suspected COVID-19 the novel coronavirus on board, in Lyon, on February 24, 2020. (Photo by JEAN-PHILIPPE KSIAZEK / AFP) (Photo by JEAN-PHILIPPE KSIAZEK/AFP via Getty Images)
“The week started with heavy losses in Asian markets as the number of coronavirus cases outside China surged, spurring worries that it could become a global pandemic,” said Swissquote Bank senior analyst Ipek Ozkardeskaya in an early morning note to clients today. “There is a risk of a sharp downside correction, yet we do not rule out the possibility that prospects for more monetary support from the central banks would sustain the U.S. stock rally after a potential downside shock, in which case, only investors with very solid nerves would be rewarded.”
Bad news on the corporate front continues as well.
Companies’ sales warnings
Billionaire investor Warren Buffett cautioned in a television interview that his collection of industrial businesses —from furniture to railroads — may be getting hurt by the coronavirus. MGA Entertainment’s founder Isaac Larian — maker of the popular Bratz doll line —warned in an FT interview the toy business would be hit “big-time” from the coronavirus. China is the manufacturing hub of the toy industry — 80% of toys come from the country. Larian said toys could be out of stock as soon as Easter.
This comes on the heels of a material sales warning from tech giant Apple a week ago. The company’s business is being hampered by empty stores in China and closed manufacturing plants vital to iPhone production.
“The market hasn’t reflected any of this stress: the last correction of 5% of more was August 2019, and that month also marked the last time the VIX moved above 20, and the last time we had a daily market move of 2% or more. Corrections don’t happen according to a calendar, but it feels like we’re overdue one,” said Brown Brothers Harriman chief investment strategist Scott Clemons.
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Watch The First Trade each day here at 9:00 a.m. ET or on Verizon FIOS channel 604. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
"My flip phone is permanently gone," Buffett told CNBC's Becky Quick during a Squawk Box interview on Monday. "I've been given several of them, including [from] Tim Cook."
Once a fan of the $20 Samsung SCH-U320, Buffett is now using Apple's latest iPhone 11. He's been a longtime user of the flip phone, even though Apple is Berkshire Hathaway's third largest business, behind insurance and railroads. But, he says the flip phone is "permanently gone" even though he admits he mostly uses the iPhone for phone calls.
"You're looking at an 89-year old guy who's barely beginning to get with it," Buffett said, though he doesn't use "all its facilities like most people."
"I use it as a phone," he said. Buffett said in the past that he uses an iPad to check stock prices and do research.
Cook has said he would fly to Omaha, Nebraska, to help Buffett set up his new phone.
"I told him I'll personally come out to Omaha and do tech support for him," the Apple CEO said in 2018.
Buffett said earlier Monday that Apple is "probably the best business I know in the world." Berkshire owns roughly 5.5% of Apple, according to Buffett. Berkshire owned more than 245 million shares of Apple, worth nearly $72 billion, according to a Dec. 31, 2019 filing with the government,
Apple shares are up about 80% over the past 12 months.
"I feel very good about the banks we own. They're very attractive compared to most other securities I see," Buffett told CNBC's Becky Quick on "Squawk Box" on Monday.
Banks are a big part of Berkshire Hathaway's portfolio, which is worth more than $248 billion.
"Banking is a good business if you don't do dumb things on the asset side, I mean, basically," Buffett said. "The banks we own earn between ... 12% and 16% or so on net tangible assets. That's a good business, that's a fantastic business against the long-term bond at 2%."
Buffett highlighted banks buying back stock as a top reason for why he likes the sector. For example, Bank of America "is buying in a lot of stock every year," Buffett said, "so our ownership of Bank of America this year will probably go up 7 or 8% without us spending a dime."
"I'd like to own any business, any good business, where my ownership just goes up 7 or 8% every year without me spending any money and, on top of it, I get a dividend," the Berkshire chairman and CEO added in the interview from the conglomerate's headquarters in Omaha, Nebraska.
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