Tuesday, February 25, 2020

Dow Jones Plunges 900 Points As Coronavirus Fears Ravage Stock Market
04:10 PM ET 02/25/2020

The Dow Jones Industrial Average plunged nearly 900 points as the number of coronavirus cases continued to rise outside of China, sending key market indexes reeling again in the stock market today.

The Dow Jones industrials dived 3.1%, the S&P 500 caved 3% and the Nasdaq composite crashed 2.8%. Small caps tracked by the Russell 2000 fared much worse, cratering 3.5%. Volume swelled on both major exchanges vs. the same time Monday, though it tracked lower earlier in the session.

Blue chips are getting hit hard as the Dow is now down 5% for the year. The S&P 500 is off 3%, while the Nasdaq is now flat.

Coronavirus pandemic fears intensified as cases continues to spread outside of China. Austria confirmed its first two cases of the virus. Italy on Monday confirmed a fifth virus death and announced more than 200 confirmed cases since Friday. Iran's deputy health minister tested positive for coronavirus as the country contends with an outbreak.

The Dow Jones index, now down more than 1,900 points this week, was red across the board. It closed below its 200-day moving average for the first time since August. Earlier, three stocks avoided the sell-off: Microsoft (MSFT), McDonald's (MCD) and Home Depot (HD). But as the market worsened, they gave up their gains too.

Seven Dow industrials stocks including Boeing (BA), Visa (V), Dow (DOW) and American Express (AXP) — shed more than 4% each.

Apple (AAPL) reversed from a small gain to a 3.4% loss for a third straight drop. The iPhone maker's stock on Monday closed below its 50-day moving average line for the first time since a Sept. 11 breakout past a 221.47 buy point of a flat base. The 50-day line is a key support level.

Look Out For Sell Signals

Transportation, security software and oil stocks were some of the biggest losers among IBD's 197 industry groups. Tech stocks also sold off en masse.

Information technology services provider Perficient (PRFT) plunged nearly 11% in heavy trade to fall well below its 50-day line. That marked two sell signals: a round trip as it gave up a double-digit gain from its last buy point, and the heavy-volume break of support at the 50-day and 10-week moving averages. On Monday, Perficient had breached the 50-day line but reversed back above it by the close.

Security software maker Ping Identity (PING) sank 10% in twice normal turnover to undercut its 50-day average. It also triggered the 7%-8% loss-cutting sell rule, as shares tumbled more than 8% from a 28.11 buy point.

Sales Miss Fells Palo Alto

Other security software stocks getting routed included Palo Alto Networks (PANW), down 17% in tremendous trade, and Check Point Software (CHKP), off 5% in heavy volume. After the close Monday, Palo Alto missed on Q4 sales and offered disappointing profit and revenue guidance.

Over in the IBD 50, HealthEquity (HQY) slumped 7% in volume 33% higher than usual. Shares pulled back below an 85.17 buy point of a lengthy consolidation cleared last week.

The stock got some airplay in today's IBD Live Show, which also discussed ways to hedge a portfolio of stocks for the short term.

Mastercard (MA) dropped nearly 7% in triple normal trade to undercut its 50-day line for the first time in over three months. The stock remains 3% above a 293.79 flat-base buy point, but had been up nearly 20% in the week prior.

The Innovator IBD 50 ETF (FFTY) fell 3% to breach its 200-day moving average.

Follow Nancy Gondo on Twitter at @IBD_NGondo

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