Around 11 a.m., it looked like the bulls were in for another painful day. The SPDR S&P 500 ETF (NYSEARCA:SPY) gapped higher by 3.8%, but those gains quickly evaporated. Luckily, we saw a huge rebound in the stock market today, with shares climbing 5.2% on the day.
It was an impressive move, but hopefully it doesn’t lead to a false sense of confidence. Remember, the Dow Jones Industrial Average shed 2,000 points on Monday, while the S&P 500 lost almost 8%. These are not normal figures to be discussing at this point. So while a 5% move in the S&P 500 may feel good, it’s only a start. There’s still a lot of work to do.
Governmental Help
Helping spur some hope was the White House. According to sources, President Donald Trump pitched the idea of zero payroll taxes through the end of the year. The government is also considering helping the shale oil industry, as well as travel companies like cruise ship operators and airlines.
The idea that these companies may receive help gave a boost to the sectors on Tuesday. Of course, it comes after many are down 50% or more from their highs, as investors have dumped these names hand over fist.
American Airlines (NASDAQ:AAL), United Airlines (NASDAQ:UAL) and Delta Air Lines (NYSE:DAL) have all opted to cut back capacity. That goes for both domestic and international flights. The three carriers are also letting customers rebook their flights without charging change fees through April 30.
Norwegian Cruise Line (NYSE:NCLH), Royal Caribbean (NYSE:RCL) and Carnival Cruise (NYSE:CCL) all hit 52-week lows on the day, despite reports that the government may be willing to help the industry. Demand is plummeting, as consumers worry about the spreading virus. On the plus side though, all three names closed higher on the day.
Helping both industries — airlines and cruise operators — is the enormous fall in oil prices. Delta alone said it expects to save $2 billion in fuel expenses this year.
Movers in the Stock Market Today
But the decline in oil prices doesn’t help everything and will put an obvious squeeze on oil companies. It’s hurting even solid operators, too. Occidental Petroleum (NYSE:OXY) shares ripped higher, climbing 14.6% on Tuesday after slashing its dividend 86% from 79 cents per share to 11 cents.
Normally that would cause a stock to decline, but not when the yield had climbed to an unsustainable 25%. Management also announced a cut to its capital expenditure budget. The company now expects 2020 capital expenditures between $3.5 billion and $3.7 billion, down from a prior range of $5.2 billion to $5.4 billion.
Amid all the volatility, Tesla (NASDAQ:TSLA) hit a notable milestone. The automaker produced its one-millionth vehicle, a feat many long-time bears likely thought would never come.
Shares of Tesla were surprisingly tame on Tuesday — up just 6.1% — despite reports that it’s upping production of certain parts and components for its Shanghai factory. It points to solid demand in China, despite recent global developments.
Novavax (NASDAQ:NVAX) shares were in the spotlight Tuesday morning, up more than 17% in pre-market trading. However, those gains faded to just 6.3%, as Novavax continues to work toward a treatment for the coronavirus from China. The company was awarded $4 million from the Coalition for Epidemic Preparedness Innovations, and is in talks to help raise funds for Phase 1 trials. In other words, it’s still early days.
Lastly, while the market enjoyed a big rally, there are still big-time concerns lingering about the virus. Harvard is shifting to online classes after its spring break concludes and Italy is on lockdown.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.