In the stock market’s worst wipeout since the height of the coronavirus panic in March, only one member of the S&P 500 Index managed to post a gain.
Supermarket operator Kroger Co. finished in the green, eking out a 0.4% advance after BMO raised its price target for the stock. That’s in stark contrast to the benchmark equity gauge, which plummeted 5.9% as fears of a second wave of U.S. coronavirus infections gripped markets. More than 60 of the index’s members lost at least 10%.
Thursday’s selloff unwound risk-on sentiment that had been building for several weeks, with investors bidding up battered industries best poised to profit as states reopened. However, signs that virus cases are rising in some regions halted the rotation: airlines and cruise companies were among the hardest hit, with Norwegian Cruise Line Holdings Ltd. plummeting over 16% in the day’s worst performance. Meanwhile, in the technology-heavy Nasdaq 100, virtual meeting company Zoom Video Communications, Inc. was the only stock to gain.
“The entire thesis that the virus was over was pretty flawed,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “The catalyst is the second-wave narrative, but the precondition is stocks were fully valued at best and overvalued at worst.”
Taken against the S&P 500’s 45% advance since late March, Thursday’s slump is but a blip. And despite the selloff -- which erased nearly $2 trillion of market value -- the index’s forward valuation was still 13% higher than in February, when the virus crash began.
©2020 Bloomberg L.P.
