Friday’s action was about as bad as Thursday’s — at least until the final hour. Just a few days ago, it looked like the market may put in a V-shaped recovery, but now a retest of the February lows is certainly possible. It was a tough day in the stock market today, with the S&P 500 shedding about 4% at one point.
That’s despite the index falling 3.4% in the prior session as well. The CBOE Volatility Index (VIX) exploded to a 10-year high on Friday, topping $53 at one point in the day. We have cautioned numerous times over the past few weeks that with the VIX in the $30 to $35 or higher range, investors need to be careful.
It’s a tough environment, with irrational and erratic moves occurring for no reason at all. That’s just what comes with the territory of an elevated VIX reading. That said, a late-session surge sent stocks rocketing higher. The S&P 500 ended lower by about 1.7% on the day and, believe it or not, actually finished the week higher, up about 40 basis points.
Jobs, Jobs, Jobs
After a difficult Thursday session, investors hung their hat on two things. First, the SPDR S&P 500 ETF (NYSEARCA:SPY) was still above its 200-day moving average. Second, the jobs report was due up this morning.
While a poor result would have certainly slugged the markets, bulls hoped a strong result would bring some optimism back into play. That was not the case in the stock market today. In February, the U.S. economy added 273,000 jobs, smashing expectations of 174,000. Wages were up (and in line with expectations), while past reports were revised higher.
But it didn’t matter. Investors were selling before the report — via index futures — and they kept right on selling up until the open. That’s as the jobs report is a backward-looking report and investors know the impact of the coronavirus from China won’t show up much in this report. However, March’s report could look different.
Movers in the Stock Market Today
Gilead Sciences (NASDAQ:GILD) was one of the few bright spots on Friday. Shares rose 5.4%, as optimism over a possible coronavirus cure has investors feeling optimistic. Preliminary results could be available this month, according to Evercore analysts.
It might not help the coronavirus situation much, but Amazon (NASDAQ:AMZN) is working on a cure as well. This being for the common cold. It’s an interesting direction for the e-commerce giant, which is clearly looking to increase its presence in healthcare.
Oil prices tumbled almost 10% on Friday and continue lower. It’s dragging the energy sector down with it, as OPEC continues to agree on a production cut in an effort to boost oil prices. The Energy Select Sector SPDR ETF (NYSEARCA:XLE) is hitting multi-year lows, with many names hitting decade-long lows, or worse. Chesapeake Energy (NYSE:CHK) stock hit a new 52-week low of 20 cents.
Gilead was a Top Stock Trades candidate on Friday, and so were Advanced Micro Devices (NASDAQ:AMD) and Salesforce (NYSE:CRM). The latter two are being recommended by analysts.
Canaccord Genuity says Salesforce is one investors should consider buying during the market meltdown. The valuation is attractive and management continues to execute well, they argue. The analysts also like Twilio (NYSE:TWLO), Elastic (NYSE:ESTC), Slack (NYSE:WORK) and Avalara (NYSE:AVLR). They have a “buy” rating on all five stocks.
As for AMD, the company said it doesn’t expect to realize much of an impact from the coronavirus. Management reiterated its first-quarter guidance, but expects sales to be on the lower end of its range. Following the announcement, Jefferies bumped their price target from $58 to $60 and maintains a buy rating.
Craig-Hallum and Atlantic Equities analysts also raised their price targets to $60.
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.