This is the level to watch in the S&P 500 as stocks touch bear-market territory - CNBC

It's a tough time to be an investor.

The Dow Jones Industrial Average officially entered bear-market territory on Wednesday after a 1,400-point plunge, falling more than 20% below its record closing high made just a few weeks ago in February. Wednesday's nearly 6% drop came on a volatile day of trading during which the World Health Organization declared the fast-spreading coronavirus a global pandemic.

The S&P 500 ended trading about 5% lower, just short of a bear market, which is defined as a 20% drop from recent highs.

Yet analyst Craig Johnson said the S&P's trading to date — even in this particularly volatile time — has been technically "perfect."

"What I mean by that is, if you look at the lows you'd seen in December of '18 to the highs we put in only about two weeks ago, you've seen these sell-offs really obey Fibonacci retracement levels," the senior technical research analyst at Piper Sandler said Wednesday on CNBC's "Trading Nation"

Fibonacci retracement levels are widely used in technical analysis to find potential areas of support or resistance in stocks and indexes. Inspired by medieval mathematician Leonardo Fibonacci, who had theories about specific numbers and patterns repeating throughout nature, the levels are displayed on charts as horizontal lines associated with percentages that track how much of a previous move has been retraced.

Last Friday, for instance, "you pulled back through ... the 50% level," Johnson said. Stocks closed lower that day after gaining traction into the close and paring deeper losses.

"You found your footing, you started to rally up, and then you broke that," Johnson said. "Once you broke it, you corrected on Monday all the way back to the next Fibonacci retracement level."

Monday was the Dow's worst day since 2008, with that index seeing a nearly 8% loss. The S&P dropped more than 7.5%.

On Wednesday, the S&P ended trading at 2,741.38 with a nearly 5% loss for the day, but Johnson warned there could be more weakness in store.

"The level that we're going to be watching from here ... is 2735, because that is the level of Monday's lows," the analyst said. "Any sort of break below that is going to probably open the door for another leg lower."

In Thursday's premarket, the S&P sank 4.65 to 2,613.50.

Nancy Tengler, chief investment officer of Laffer Tengler Investments, said in the same interview that after hedging her clients' portfolios appropriately, she saw the recent losses as potential opportunities.

"We had put a hedge on our clients' portfolios in early February. It's worked out very nicely. It's a victory, I suppose, but a pyrrhic one," she said. "And so, [on Tuesday], we actually started entering into the long-only space."

Tengler said her firm sold out of some of its consumer staples holdings that had been relative outperformers — namely Walmart and PepsiCo — and "added to some more cyclical exposure."

"As this market looks through the coronavirus and oil issues, we think that you'll be happy that you own some of those stocks," she said of the cyclical names. "So, not super-cyclical, but things like Microsoft, Salesforce.com. We added a little to Facebook. And then, also, we added to some of the financials and a new position in T.J. Maxx."

Tengler stressed that when it comes to buying stocks, she's "gingerly stepping in."

"We're not going in with both feet. We're just taking our time and picking away at the higher-quality names," she said.

Disclosure: Laffer Tengler Investments owns shares of Microsoft, Salesforce.com, Facebook and TJX Companies.

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2020-03-12 11:27:00Z
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Dow futures drop 1,100 points as Trump speech fails to calm investors rattled by coronavirus fears - NBC News

Futures contracts tied to the major U.S. stock indexes fell sharply early Thursday after an address from President Donald Trump failed to quell concerns over the possible economic slowdown from the coronavirus.

The move comes after the Dow Jones Industrial Average ended its historic 11-year bull market run by closing in bear-market territory. A bear market marks a 20 percent decline from all-time highs.

As of 5 a.m. ET Thursday, Dow futures implied a loss of more than 1,100 points at the open. S&P 500 and Nasdaq 100 futures were also deeply in the red.

In his address, Trump announced travel from much of Europe will be suspended for 30 days as part of the government’s response to the coronavirus outbreak. Trump also said the administration would provide financial relief for workers who are ill, caring for others due to the virus or are quarantined.

March 12, 202000:59

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These moves were not enough for investors, however, who were looking for a more robust fiscal response to curb potentially slower economic growth.

Also causing concern was the announcement Wednesday that the National Basketball Association is suspending its season after a Utah Jazz player tested positive for coronavirus.

The futures plunge came after yet another wild session on Wall Street and the demise of the Dow’s record-setting bull market run that began in March 2009. The blue-chip index tumbled 1,464.94 points, or 5.9 percent, to close at 23,553.22. The 30-stock average closed in a bear market, putting to end an expansion that started in 2009 amid the financial crisis.

“The crux of the angst investors are feeling as the coronavirus spreads surrounds what might happen to consumer spending,” wrote Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

“Consumers sitting at home and not out spending money because they fear catching the coronavirus is the ultimate negative outcome,” he added. “It has been the U.S. consumer who has been driving the recovery bus during this long expansion.”

The futures plunge came after yet another wild session on Wall Street and the demise of the Dow’s record-setting bull market run that began in March 2009. The blue-chip index tumbled 1,464.94 points, or 5.9 percent, to close at 23,553.22. The 30-stock average closed in a bear market, putting to end an expansion that started in 2009 amid the financial crisis.

The Dow’s 1,464-point drop on Wednesday was in large part thanks to outsized losses in planemaker Boeing, which fell 18.15 percent and suffered its worst day on Wall Street since 1974, according to FactSet data. That stock is down more than 50 percent over the last six months.

The S&P 500 and Nasdaq Composite fared slightly better on Wednesday, down 4.89 percent and 4.7 percent respectively. Those two indexes also remain just outside of bear market territory albeit down at least 19 percent from their respective record closes.

Investors continued to blame the spread and economic impact of the coronavirus for the last month’s steep losses. The virus, which has now infected more than 124,000 people worldwide and killed at least 4,589, threatens to disrupt countries like Italy that have taken aggressive action to slow its spread.

Italian Premier Giuseppe Conte announced late Wednesday that all the country’s stores except pharmacies and groceries will be closed in a move deemed both necessary to safeguard human health and a threat to the country’s output.

Wall Street worries that such measures could tip the global economy into recession, especially if Washington decides the disease is rampant enough in the U.S. to warrant similar measures. The World Health Organization declared COVID-19 a pandemic earlier on Wednesday.

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2020-03-12 10:20:15Z
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Oil prices will keep falling until Russia or Saudi Arabia hit 'pain point,' says former White House aide - CNBC

The price of oil is likely to fall "much lower from here," according to Bob McNally, who was energy advisor to former U.S. president George W. Bush.

The oil rout started on Monday, plunging over 20% following a disagreement on production cuts between OPEC and its allies. Russia declined to lower output last week, and Saudi Arabia announced Saturday that it will offer discounts to its official selling prices next month. The kingdom, the de facto leader of OPEC, is also planning to raise production, together with the United Arab Emirates.

Despite the market turmoil and resultant losses, Saudi Arabia will not cut production unilaterally, said McNally, founder of oil consultancy Rapidan Energy Group.

"Prices of oil are going much lower from here," said McNally told CNBC on Thursday. "Everybody's got a pain point and we're going to go down and test it."

National prestige is involved here, honor is involved and political power is involved. And political leaders will suffer costs in a war if they believe they are pursuing a greater and more important aim.

Bob McNally

Rapidan Energy Group

Oil prices are going to fall until they hit a "political-financial pain point" for Saudi Arabia or Russia — or if North American production is significantly curtailed, said McNally. He did not give a price forecast.

Prices will test a point well below Russia's break-even price — at 42.4 euros ($47.90) a barrel, said McNally.

But there's more at stake than just oil. 

"National prestige is involved here, honor is involved and political power is involved. And political leaders will suffer costs in a war if they believe they are pursuing a greater and more important aim," said McNally.

Benchmark international Brent crude oil futures were trading around $34.45 a barrel on Thursday afternoon in Asia, while benchmark U.S. West Texas Intermediate futures were around $31.66 a barrel. Both grades were over $40 a barrel last week.

"What makes this even more damaging, and more dangerous and bearish for crude oil prices and equity prices, than anything we've seen in modern times, is this surge in supply. The supply shock is coinciding with an authentic catastrophic demand collapse," said McNally.

Before the talks between OPEC and its allies fell apart, oil prices had already been under pressure from the U.S.-China trade dispute, as well as the coronavirus outbreak.

With the American shale industry under siege from the oil industry turmoil, the U.S. is likely to take a tougher stance with Russia to get the country back to talking with Saudi Arabia, said McNally. That could mean tighter sanctions on Russian state oil company Rosneft, for instance, to get Russian President Vladimir Putin back to the negotiating table.

"To get reelected, you'll do almost anything. But in this case, I think the goal is perhaps more ... to raise the cost on Putin, to induce him to go back to the table with the Saudis," he said.

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2020-03-12 08:08:48Z
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The losers — and even bigger losers — of an oil price war between Saudi Arabia and Russia - CNBC

Russian Energy Minister Alexander Novak and Saudi Energy Minister Abdulaziz Bin Salman sign documents during a ceremony following a meeting of Russian President Vladimir Putin with Saudi Arabia's King Salman in Riyadh, Saudi Arabia, on October 14, 2019.

ALEXEY NIKOLSKY | SPUTNIK | AFP via Getty Images

An intensifying oil price war between Saudi Arabia and Russia has created "very painful" market conditions for the world's largest crude producers, analysts have told CNBC, with many braced for sliding revenues over the coming months.

International benchmark Brent crude traded at $34.23 Thursday morning, down over 4.4%, while U.S. West Texas Intermediate (WTI) stood at $31.64, around 4% lower. Oil prices have almost halved since the start of the year.

The downturn for crude futures comes shortly after talks between OPEC kingpin Saudi Arabia and non-OPEC leader Russia broke down.

Markets had been hoping for an agreement between Riyadh and Moscow, as well as other OPEC and non-OPEC producers, in order to deepen oil output cuts and prop up prices.

The group's unexpected failure to reach a consensus on production policy led oil prices to crash on Monday.

President Donald Trump's surprise announcement Wednesday to ban travel from continental Europe following the WHO's declaration that the coronavirus can now be described as a pandemic also acted as a catalyst for further oil price losses Thursday morning. 

What does a price war mean for US shale?

Most energy analysts have dismissed the idea that Saudi Arabia and Russia's price war has been specifically designed to target U.S. shale, but the industry is expected to bear the brunt of the pain.

Securing America's Future Energy (SAFE), a think tank that advocates for reducing U.S. dependence on oil, believes the American oil industry is the loser from the current price war.

"Saudi Arabia claims to be the swing producer to stabilize the market, but mostly they just cause swings that hurt the free market and the ability to compete," Robbie Diamond, president and CEO of SAFE, said via email shortly after OPEC and non-OPEC allies failed to reach an agreement.

"Our industry and the U.S. economy has no choice but to watch once again as Saudi Arabia tanks the price of oil to suit its domestic priorities," he added.

A pumpjack operates above an oil well at night in the Bakken Formation on the outskirts of Williston, North Dakota, U.S., on Thursday, March 8, 2018. 

Bloomberg | Bloomberg | Getty Images

Trump initially welcomed the declaration of a price war between Saudi Arabia and Russia, hailing lower oil prices as good news for U.S. consumers.

Saudi Arabia has since signaled its intent to flood the market with crude, unveiling plans Wednesday for state-owned Saudi Aramco to ramp up production to 13 million barrels per day (bpd).

It is thought such a move could prompt a wave of bankruptcies and investment cuts in the U.S. which, in turn, would have a noticeable impact on shale production.

IEA says OPEC allies are in a 'very, very difficult situation'

Some believe the worst hit from a sharp drop in oil prices will be long-time allies of de facto OPEC leader, Saudi Arabia.

"My main worry today is not on shale," Fatih Birol, executive director of the International Agency (IEA), told CNBC's Steve Sedgwick earlier this week.

"It is mainly on some of the major oil-producing countries who have not — despite the calls from the IEA many, many times — diversified their economies."

Birol suggested countries like Iraq, Algeria and Nigeria — all OPEC producers — were in a "very, very difficult situation" and would require support from the rest of the world.

"They are facing major fiscal strains. Many of them will have difficulties to pay the salaries for the public sector, spending for health, for education, which in turn may provide social pressures in those countries.

Iraq, OPEC's second-largest producer, is thought to be particularly exposed to an all-out price war because it has one of the least diversified economies of the producer group — despite relatively low production costs.

Iraq's oil ministry said Tuesday that it will keep in touch with other OPEC and non-OPEC members in an effort to prevent an oil price collapse, Reuters reported.

What about the instigators of the price war?

Shortly after talks broke down with Saudi Arabia late last week, Russia claimed it could withstand lower oil prices for as long as a decade.

Yet, while many believe Moscow is in much stronger financial position to cope with a protracted period of lower oil prices than in previous years, it is not thought to be in the best interests of Russia or Saudi Arabia.

"If you assume that the price difference between agreeing and rejecting last week's recommendation is $25 (a barrel) then Russia stands to lose a considerable amount of money by not endorsing the proposal," Tamas Varga, senior analyst at PVM Oil Associates, said in a research note.

"There will come a point when the negative consequences of Russia's decision will become unbearable for the instigator," he added.

On Tuesday, Russian Energy Minister Alexander Novak appeared to keep the door open for Moscow and Riyadh to return the negotiating table in order to stabilize markets.

Chris Weafer, a senior partner at Macro-Advisory, told CNBC's "Squawk Box Europe" on Tuesday that a reaction from the world's second and third-largest oil producers would be inevitable.

"Even at $30, something is going to happen. The Saudis are going to have to do something because they need a higher price. The U.S. shale industry cannot afford that low price."

"We are not going to stay here. We can't," Weafer said.

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2020-03-12 07:35:07Z
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Here’s What Investors Say About Trump’s Shock Virus Plan - Bloomberg

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Here’s What Investors Say About Trump’s Shock Virus Plan  Bloomberg
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2020-03-12 06:39:51Z
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Here We Go Again: Dow Drops 880 Points As Stock Market Turmoil Continues - NPR

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The stock market has continued to be volatile in recent weeks over growing fears that the spread of coronavirus will push the world economy into recession. Timothy A. Clary/AFP via Getty Images hide caption

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Timothy A. Clary/AFP via Getty Images

Updated at 12:32 p.m. ET

The Dow Jones Industrial Average fell sharply yet again Wednesday morning after staging a rally a day earlier. Just on Monday the stock market had its worst drop since 2008 amid fears that the growing spread of coronavirus would push the global economy into recession.

The blue chip index was down more than 880 points, or 3.5%, in midday trading. The S&P 500 and the Nasdaq were down about 3%.

Early Monday afternoon, the World Health Organization declared that the disease COVID-19, caused by coronavirus, is a pandemic. As of Tuesday, the WHO was reporting 142,823 cases in 109 countries on six continents.

The Dow rose 1,167 points, or 4.9%, on Tuesday — a partial rebound from Monday's more than 2,000-point drop, which was a stunning loss of about 7.8%.

The airline industry has been one of the hardest hit by the coronavirus, as people and businesses cancel travel plans. In an interview with NPR's Peter O'Dowd on Wednesday, JetBlue CEO Robin Hayes compared the impact to the aftermath of the Sept. 11, 2001, attacks.

"I would say we're in the middle of a very significant impact, some would say devastating impact, to the airline industry," Hayes said. "There were lots of concerns just after 9/11 about flying. And we're really seeing the same now with the coronavirus."

But he said the industry is better able to withstand the economic shock than it was during the financial crisis. "It's pretty healthy. We've all built stronger balance sheets. We've all got good liquidity. And so I think the economic backdrop for airlines is very different," Hayes said.

The Federal Reserve and other central banks have been cutting interest rates, and the U.S. and other governments have been rolling out aid and stimulus proposals to help cushion the economic blow of the outbreak.

The Bank of England was the latest central bank to lower rates, announcing an emergency 0.5-percentage-point cut on Wednesday. It said the cut "will help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance."

Oil prices, which can reflect economic demand, have also been volatile after Saudi Arabia unexpectedly decided to slash its prices for crude last weekend. The price of Brent, a global benchmark, was down more than 2% Wednesday. It has fallen 27% over the past five trading days.

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2020-03-11 16:56:38Z
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PepsiCo to buy energy drink maker Rockstar for $3.85bn - Financial Times

PepsiCo is seeking to boost its presence in the fast-growing energy drinks category, announcing it will buy Rockstar Energy Beverages for $3.85bn.

The deal reflects the trend among big beverage companies like PepsiCo and Coca-Cola to overhaul their portfolios to shift their reliance on sales of sugary, fizzy drinks and towards options ranging from tea and coffee to water of both still and sparkling varieties, which appeal to health-conscious and millennial consumers.

Neither PepsiCo nor Coca-Cola own a major brand in the energy drinks category, which is forecast to grow to more than $80bn over the next five years, and is currently dominated by Red Bull.

Ramon Laguarta, PepsiCo chief executive, described the acquisition as “highly strategic” and said it would allow the company to “both accelerate Rockstar’s performance and unlock our ability to expand in the category with existing brands such as Mountain Dew.”

The deal would mark one of the first big moves for Mr Laguarta, who took the reins from Indra Nooyi in 2018, and comes at a time when sharp moves in financial markets have prompted investors and bankers to rapidly reassess the outlook for merger and acquisition activity.

PepsiCo shares were down 3.8 per cent in pre-market trading on Wednesday, slightly worse off than the 3.4 per cent drop for the S&P 500 that was implied by futures as investors continue to grapple with volatility amid the coronavirus outbreak and following Monday’s oil price plunge.

PepsiCo has distributed Rockstar in North America since 2009. Its own stable of energy drinks is limited to Mountain Dew Kickstart, GameFuel and AMP. Coca-Cola owns a stake in Monster Beverage, and had a distribution agreement with the company that, until an arbitration ruling last year, meant it could not sell its own Coke-branded energy drinks in the US.

In February, PepsiCo said it would buy Hangzhou Haomusi Food, also known as Be & Cheery, one of the largest online snacks companies in China, for $705m, which it said at the time represented “an important step” in its goal to become China’s leading consumer-centric food and beverage company.

PepsiCo said in a statement on Wednesday it did not expect the transaction, which is subject to the usual customary closing conditions and approvals, to be material to its revenue or earnings in 2020. The deal is expected to close in the first half of this year.

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2020-03-11 16:56:23Z
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