In an emergency move Sunday, the Federal Reserve announced it is dropping its benchmark interest rate to zero and launching a new round of quantitative easing.
The QE program will entail $700 billion worth of asset purchases entailing Treasurys and mortgage-backed securities.
Markets responded negatively, with Dow futures pointing to a drop of 900 points when the market opens Monday morning.
Futures contracts tied to the major U.S. stock indexes fell on Wednesday night after an address from President Donald Trump failed to quell concerns over the possible economic slowdown from the coronavirus.
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The major averages all slid more than 3% on Monday as the number of reported coronavirus cases outside of China rose.
If history is any indication stocks may be set for a relief rally on Tuesday.
According to Bespoke Investment Group, since March 2009 the S&P 500 has fallen more than 2% during a Monday session 18 other times, and that in 15 of the prior instances the index rose the following day, for an average gain of 1.02%.
Microsoft’s primacy and ubiquity in portfolios reflects the way it exemplifies nearly every characteristic that today’s market is rewarding richly.
Microsoft enjoys mid-30s percent profit margins, has repeatedly reloaded a $40 billion buyback plan and pays out more than $15 billion a year in dividends.
Microsoft is among the top 10 holdings in the most hedge funds, according to Goldman Sachs.
But has the acclaim for Microsoft become a bit extreme and uncomfortably unanimous.?
Stocks rose for a third straight day on Wednesday, pushing the S&P 500 back to levels hit prior to the coronavirus scare.
The broad index closed 1.1% higher at 3,334.69, led by strong gains in the energy, financials and health care sectors. That gain drove the S&P 500 to a record closing high. It also erased its losses stemming from fears over the coronavirus and came within a whisker of hitting an all-time intraday high.
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The S&P 500 has dropped 3% from its record high. Economically cyclical groups have been purged. Bonds are leading stock returns one month into the year.
Something was bound to come along and prompt a pullback. As it happened, the viral outbreak arrived to do the job.
Given that a perfectly routine decline following a strong multi-month rally could amount to 2% to 5%, a further drop of 2% to 3% would not compromise the broader uptrend.
Bond markets pricing in a high likelihood of another Fed rate cut around mid-year.