Coronavirus Fears Finally Topple the Stock Market’s Kingpins

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(Bloomberg) -- The coronavirus has come for the market heavyweights and story stocks that previously appeared immune from the rising risks to global activity.

The likes of Apple Inc. and Microsoft Corp., along with expensive software stocks, are leading U.S. indexes lower over the past few sessions. All are underperforming the S&P 500 by more than 2 percentage points over the past three sessions.

Coronavirus Fears Finally Topple the Stock Market’s Kingpins

It’s a definitive change in the character of the U.S. equity market retreat, which had previously seen energy, industrials and materials the most battered by these fears. During the late-January spree of selling as markets digested news of the virus, expensive software stocks and select tech behemoths including Microsoft actually managed to buck the 3% decline in the S&P 500 Index.

Coronavirus Fears Finally Topple the Stock Market’s Kingpins

“Market gains over the past year and into 2020 have been nearly entirely driven by increased multiples, leaving markets at risk to deterioration in investor sentiment as is happening this morning,” writes Dennis DeBusschere, head of portfolio strategy at Evercore ISI. “The short-term chaotic backdrop will lead active investors to de-risking, growth and momentum factors will remain under pressure as long as that is the case.”

In addition, the stocks beloved by retail traders are similarly under severe pressure this morning. Plug Power Inc., Virgin Galactic Holdings Inc., Tesla Inc., and Lumber Liquidators Holdings Inc. -- all of which saw a surge in options activity that contributed to frenzied 2020 rallies -- are off at least 4% this morning.

Coronavirus Fears Finally Topple the Stock Market’s Kingpins

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