COVID-19 cases continue to rise, a factor likely weighing on the job market. Over 70,000 new cases were reported yesterday, along with nearly 1,100 new deaths. Nearly 1.1 million new cases and 12,250 deaths were reported in July, according to the World Health Organization, and many areas are reneging on previous business reopens as hospitals face pressure to manage the growing number of cases requiring hospitalization.
Today’s liquidation was driven by a sharp drop in the largest companies in the index. Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) shares both fell by more than 4%, while Amazone (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), and Facebook (NASDAQ: FB) stocks have all lost 3% or more of their value today. Non index member Tesla (NASDAQ: TSLA) Shares also sold today, following yesterday’s second quarter results which included earnings for the fourth quarter in a row, but were not strong enough to help counter the market’s bearish trajectory today. ‘hui, even on its prospects of being added to the index.
In other news, the pillars Becton, Dickinson (NYSE: BDX) and Kimberly Clark (NYSE: KMB) showed the things that make them attractive stocks to own during recessions.
Unemployment claims return to above 1.4 million as economic recovery stalls
2020 brought unprecedented levels of unemployment. Every weekly report of initial requests since the end of March would have broken the previous record for most weekly initial requests. The trend was down every week, but that trend ended this week when the number of initial requests increased by about 100,000 people compared to last week.
Faced with the massive number of people filing each week, an increase of 100,000 may not seem like a large number. Here’s a background for what a “normal” weekly unemployment filing week looks like, represented by initial claims data ahead of the coronavirus business shutdown implemented in late March:
It is true: Total initial jobless claims were less than 225,000 each week in January and February. An increase of 100,000, in the context of a normal environment, is a large change.
The main reason for this is the growing number of COVID-19 cases across the country. And although so far we have not seen any deaths in the United States reach the levels seen at the start of the epidemic this spring, hospitals are reporting a sharp increase in severe cases requiring hospitalization. Health experts also point out that there is significant evidence that many recovering people will suffer permanent injuries, including damage to the lungs and other organs.
As a result, investors sent a wide range of stocks lower today during massive sell-offs. In addition to the tech giants mentioned above, the actions of casino and resort operators Las Vegas Sands (NYSE: LVS) fell 4.2% and Mexican Grill Chipotle (NYSE: CMG) the stock was down 5.4%. Sands yesterday posted second quarter earnings after the market closed, with optimism that more of its properties will reopen, but not enough to offset concerns today. Chipotle also reported profits yesterday after trading, but even its explosive results and management’s optimism were not enough to keep some investors from taking profits today.
Needles and toilet paper to pay bills
Healthcare equipment giant and Dividend Aristocrat Becton, Dickinson, reminded investors why its business is a great recession-resistant investment and that there are catalysts that have positioned it to deliver strong results right now . The company said it had “additional pandemic” orders for 265 million needles and syringes from the US and Canadian governments, and another 40 million from the UK. The medical device supplier is a key supplier to the global healthcare supply chain, and it looks like investors are starting to see the value. Shares have risen 16% over the past month.
Kimberly Clark, the consumer goods giant best known for its brands of kitchen towels, toilet paper and diapers, released second quarter results ahead of the market opening today. Organic revenue grew 4% as people showed brand loyalty, while its pricing power and strong supply chain helped boost profits by 3% and drive the flow upwards. operating cash flow to a record $ 1.6 billion. Its stocks have resisted the trend today, gaining 2%. Total returns – including dividends for this dividend aristocrat – are just under 8% so far this year.
Tesla upside down
After making a second quarter profit that many analysts weren’t expecting, Tesla shares fell nearly 5% today. On the one hand, today’s liquidation may have been unexpected. Not only did the company signal this surprise profit that led it to join the S&P 500 Index, but the outlook for the rest of the year was optimistic.
On the other hand, Tesla’s stock is absolutely out of stock. So far this year it has grown over 260% and gained almost 500% in the last year. It seems that even the prospects of the world’s largest index funds of having to buy stocks to add the company to their holdings were not enough to keep some investors from taking profits, at least for today.