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Dow Logs Worst One-Day Slump in History: ETF & Stock Winners

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Wall Street went into a tailspin in the final days of February, withU.S. stocks losing for six days in a row. Things worsened for Wall Street Feb 27 on news that California is monitoring at least 8,400 people for the coronavirus. Three key U.S. indexes like the S&P 500, the Dow Jones and the Nasdaq lost more than 4% on the day. The Dow Jones fell 1,190.95 points on Feb 27 — its worst single-day slump in history (read: Go Defensive With These ETFs as Stock Rout May Worsen).

Bank of America commented that the global economy is on its way for the weakest year since the 2008 financial crisis due to increased  lockdowns, restrictions on global travel and lower manufacturing activity in China. Also, Goldman Sachs slashed its outlook for U.S. companies’ earnings growth to zero.

As a result, global markets lost $1.83 trillion on Feb 27, with the U.S. markets shedding $1.33 trillion, S&P Dow Jones’ Howard Silverblatt said in an email. Over the past six days, global markets lost $6 trillion with U.S. markets seeing an outflow of $4 trillion.

Why Dow Jones Has Lost the Most

Dow Jones can easily be considered the most trade-sensitive index in the U.S. market. With China grappling with coronavirus, several cities on lockdown and extreme trade and travel restrictions, the effect of the phase-one U.S.-China trade deal may not be realized in the near term.

Then, Boeing has been a constant pain for the Dow Jones. Boeing holds 7.68% of the fund DIA, securing the top spot. So, the company’s performance matters a lot. Its stock is down 13.7% this year (as of Feb 27, 2020), having suffered extensively due to the 737 MAX jetliner crisis. The cost of grounding 737 MAX after two fatal crashes continues to rise. Most recently, the Federal Aviation Administration (FAA) developed an airworthiness directive requiring all Boeing 737 MAXs to fix the manufacturing defect. Also, there is no hope for Boeing’s near-term recovery.

Furthermore, it has been noticed lately that the Dow Jones shares a deep relationship with oil price movement. Though the energy sector rally has spread optimism in the broader market as a whole, in most cases, on a particular day of oil surge, the spurt in the Dow Jones is steeper than that of the S&P 500, or vice versa. With coronavirus raising alarms for global growth, crude oil prices are in a tight spot. United States Oil Fund LP (USO - Free Report) has lost 23.7% so far this year (read: Virus Scare Weighs on Oil ETFs: Go Short for the Near Term).

What You Need to Know about Dow Jones-Based ETF & Stocks

Yesterday’s slump was mainly caused by Microsoft MSFT (down 7.1% on Feb 27). The tech giant revised revenue guidance on the virus fear. Dow Inc. DOW (down 6.6%), Apple AAPL (down 6.5%), Intel INTC (down 6.4%) and Exxon Mobil XOM (down 6.0%) also lost heavily (read: Microsoft Revises Sales Guidance on Coronavirus: ETFs in Focus).

On the other hand, 3M Co. MMM (up 0.8%), Pfizer Inc. PFE (down 1.79%), Merck & Co. Inc. MRK (down 2.33%), Walmart Inc. WMT (down 2.97%) and Walgreens Boots Alliance Inc. WBA (down 3%) were the top performers. Amid the rising virus-related scare, healthcare stocks were expected to fare better than other sectors. Consumer Staples like Walmart also benefitted from its presence in a relatively safe sector.

Coming to ETFs, SPDR Dow Jones Industrial Average ETF Trust DIA lost 4.54% on Feb 27. So, investors intending to play against the tumbling Dow Jones, may tap ProShares Short Dow 30 (DOG - Free Report) (up 4.51%), ProShares UltraShort Dow30 (DXD - Free Report)  (up 8.9%) and ProShares UltraPro Short Dow30 (SDOW - Free Report)  (up 13.64%) (read: Coronavirus Triggers Market Bloodbath: 7 Hot Inverse ETF Areas).

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