Dow faces crucial April test after suffering worst first quarter ever

April will pose a crucial test for stock-market investors looking for signs that the worst of the market carnage triggered by the global COVID-19 pandemic is past, as the outbreak continues to claim lives and promises historic, near-term economic pain.

Bears contend the sheer uncertainty surrounding the impact of the pandemic is likely to pave the way to further waves of selling.

“The coming weeks will be a blizzard of bad news — both on the economy and public health,” said Zach Pandl, macro strategist at Goldman Sachs, in a Monday note. “We doubt that markets will be able to price out adverse tail risks against that backdrop, and new challenges might emerge, including sovereign downgrades, FX peg breaks, or a wave of business failures.”

But some investors and analysts contend that while markets are likely to remain volatile, the stock market’s bounceback last week after tumbling with record speed from all-time highs into a bear market, gives hope that March 23 lows for major indexes may more or less hold.

Even hopeful investors often caution that bear markets are typically volatile and often see sharp rebounds before retesting lows or going on to decline even further before finding a bottom. But the fast and sizable policy response by central banks and governments have some market watchers arguing that the probability that the recent lows will hold may be better than in past major selloffs.


Keith Lerner, chief market strategist at SunTrust Advisory, said the lessons of past bear markets would normally lead him to place the probability of a retest of the market low somewhere between 70% and 80%. But he thinks the odds of a retest of the March 23 low are instead closer to 50/50.

“The market already knows that the economic data in the weeks and months ahead will be weak. The question is whether or not it will be worse than current expectations,” he said in a note.

For example, last week’s first-time weekly jobless claims figure soared past the previous record to top 3 million, yet markets rallied on the day, Lerner observed.

Stocks in early March completed a tumble into a bear market with record speed before bouncing sharply last week — a rebound that still left the Dow Jones Industrial Average with its biggest first-quarter decline

DJIA, -1.84%

 on record with a 23.2% fall and its worst quarterly performance overall since 1987. The S&P 500

SPX, -1.60%

 saw a 20% first-quarter fall, its biggest since the final three months of 2008.

The Dow on March 23 finished at 18,591.93, its lowest close since Nov. 9, 2016, which left it with a pullback of more than 37% from its all-time closing high set in February. The S&P 500, on the same day, ended at 2,237.40, its lowest close since Dec. 6, 2016, marking a nearly 34% pullback from its record finish. The indexes then began a rebound that saw the Dow log its biggest three-day gain since 1931.

Lerner said the market is likely to remain volatile in coming weeks, but that long-term investors likely stood to be rewarded by delving back into the market. Following last week’s sharp upswing, he now calls for a gradual, averaging-in approach, using pullbacks to add exposure.

Meanwhile, bullish investors might take only limited comfort in April’s position as one of the strongest calendar months for equities.

First-quarter earnings season will also kick off in April. Analysts have struggled to pin down the effects of the pandemic on the just completed quarter and, in particular, what it means for the coming quarter.

See: Will companies in the Dow report earnings as usual despite COVID-19 disruptions, or delay them because they can?

Analysts now expect the S&P 500 to report a year-over-year 5.2% decline in first-quarter earnings, followed by a 10% decline in the second quarter and third-quarter fall of 1.1%, according to FactSet. Over the past week, the aggregate earnings growth rate for calendar-year 2020 changed from slight year-over-year earnings growth of 0.6% to a slight year-over-year earnings decline of less than 0.1%.

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The Dow marked its 2nd straight gain — but Thursday jobless claims may pose the stock market’s biggest test amid coronavirus

Jobless claims haven’t been a focal point for investors for more than a decade, but market participants will be keenly watching Thursday’s figures because they could provide the clearest sign yet of the damage wrought by lockdowns that have swept across much of the U.S. to mitigate the spread of the COVID-19.

“’How will the markets survive the U.S. initial claims going ballistic?’ is probably on everyone’s minds this morning” wrote Stephen Innes, chief global markets strategist at AxiCorp.

Check out: Jobless claims set to soar by the millions as layoffs surge due to coronavirus shutdowns

Market participants are bracing for a number that could run into the millions — figures that are likely to bring to an abrupt end the first win streak for the Dow Jones Industrial Average

DJIA, +2.39%

and the S&P 500 index

SPX, +1.15%

since early February.

With one out of every five Americans under some form of stay-at-home measure to help lessen the spread of the illness that was first identified in Wuhan, China, in December, some economists are anticipating that as many as 5 million workers will show as applying for unemployment insurance in the coming weekly report. It is a staggering number that some market participants say is too large to discount and one that will likely knock the air out of a market that is searching for its footing higher.

See: 23 million American jobs in immediate danger from the coronavirus crisis

“We realize freakishly bad economic data is coming,” wrote Fundstrat Global Advisors’ Tom Lee in a Wednesday research note. “On Thursday, some economists are projecting weekly jobless claims to surge to as high as 5 million,” he wrote.

“Many of our more active and tactical clients are short into this, arguing that such wildly bad news cannot be discounted and thus, this ‘tape bomb’ should lead to a big sell-off,” he said.

On Tuesday, BTIG analysts Julian Emanuel and Michael Chu said that if a $2 trillion coronavirus rescue package being voted on by lawmakers late Wednesday wasn’t approved by the time those gut-wrenching numbers come out on Thursday, it would likely knock the wind of the market’s sails.

The BTIG researchers wrote that the “psychology of such a large weekly claims number without a deal done will inflict incrementally larger damage” on an already fragile market.

The Senate late Wednesday approved the relief bill, which is designed to shield the economy from the pandemic that has halted normal business and personal activity.

“The problem is new jobless claims will measure the extent of U.S. policy failure, and with the Congress dilly-dallying, it will not help the matters,” wrote Innes.

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Coronavirus crash puts portfolios to the test — plus other top investing tips

Don’t miss these top money and investing features:

To help you make investment decisions during this coronavirus bear market, here are some relevant stories from MarketWatch this past week.

Surviving the coronavirus crash: ‘You make most of your money in a bear market; you just don’t realize it at the time’

Value investing offers a way to weather Mr. Market’s moods, writes Vitaliy Katsenelson.
Surviving the coronavirus crash: ‘You make most of your money in a bear market; you just don’t realize it at the time’

The Dow is on pace for its worst month since the Great Depression, but here’s why all hope isn’t lost amid the coronavirus crisis

The percentage drop so far in March for the Dow would rank as its second-worst in history.
The Dow is on pace for its worst month since the Great Depression, but here’s why all hope isn’t lost amid the coronavirus crisis

A bearish ‘death cross’ has appeared in the Dow’s chart

Last death cross popped up three days before the Christmas Eve 2018 bottom.
A bearish ‘death cross’ has appeared in the Dow’s chart

As Dow wipes out over 3 years of stock-market gains, here’s a warning about calling the bottom

Resist the temptation, say Wall Street pros.
As Dow wipes out over 3 years of stock-market gains, here’s a warning about calling the bottom

It’s a ‘hide-under-the-mattress’ market. How are ETFs managing?

Investors fled into short-term bond funds last week, as might have been expected, but there were some surprises too.
It’s a ‘hide-under-the-mattress’ market. How are ETFs managing?

How coronavirus is already threatening the housing market

Mortgage firm CEO: Lenders must prepare now for a U.S. recession.
How coronavirus is already threatening the housing market

Americans need money — not more reasons to spend — or the coronavirus recession could be much worse

Market similar to post-9/11 sets up potential for S&P 500 to sink to 1,600.
Americans need money — not more reasons to spend — or the coronavirus recession could be much worse

Fed sets new loan program designed to ease turmoil in money markets

The Federal Reserve on Wednesday set out a new lan program to enhance the liquidity and functioning of crucial money markets.
Fed sets new loan program designed to ease turmoil in money markets

How the Fed’s latest crisis-era credit facility aims to finally calm rattled markets

The Federal Reserve just pulled out another bazooka to shore up jittery markets, after being criticized earlier this week for appearing to have few too bullets to spare after it cut rates, expanded its balance sheet and rolled out other emergency measures.
How the Fed’s latest crisis-era credit facility aims to finally calm rattled markets

These are the dysfunctions in the U.S. bond market that will lead the Fed to buy at least $500 billion of Treasurys

Amid frenzied trading in the past week, the $18 trillion Treasurys market is showing cracks that is raising eyebrows among traders, hedge fund managers and investors.
These are the dysfunctions in the U.S. bond market that will lead the Fed to buy at least $500 billion of Treasurys

Stocks aren’t bargains yet, but a buying opportunity will come. Here’s how you’ll know it’s here

Four key ratios show the U.S. market’s valuation picture is a lot better than it was a month ago, writes Mark Hulbert.
Stocks aren’t bargains yet, but a buying opportunity will come. Here’s how you’ll know it’s here

As gold tumbles amid the coronavirus crisis, contrarians start to smell opportunity

Now the debate shifts to when to buy.
As gold tumbles amid the coronavirus crisis, contrarians start to smell opportunity

How to protect your 401(k) during the Coronavirus-driven market crash

Panicking about the recent global stock-market selloff? Here are 3 steps you can take to protect your retirement savings.
How to protect your 401(k) during the Coronavirus-driven market crash

How to get a tax benefit out of the coronavirus market crash

Here’s what you need to know about tax-loss harvesting, a strategy that could help you lower your tax bill for years to come.
How to get a tax benefit out of the coronavirus market crash

Plus: Sign up here to get MarketWatch’s best mutual funds and ETF stories emailed to you weekly!

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Biogen orders employees to work from home after employees at Boston meeting test positive for coronavirus

Biogen Inc. has ordered all staff to work from home until further notice, as part of a sweeping round of measures implemented after employees who attended a management meeting in Boston tested positive for the coronavirus that causes COVID-19.


had about 7,400 employees worldwide as of Dec. 31, according to its latest 10-K filing with the Securities and Exchange Commission, located in Massachusetts; Research Triangle Park in North Carolina; and Baar, Switzerland.

There are 13 confirmed cases of the virus in Massachusetts, according to the Massachusetts Health Department, a majority of them connected to Biogen and the meeting it held late last month at the Marriott Long Wharf Hotel.

About 175 people attended the meeting, including Chief Executive Michel Vounatsos and workers from the Swiss operation, the company told MarketWatch.

For daily coverage: Coronavirus update: 101,733 cases, 3,460 deaths, U.S. grocers see sales jump as Americans prepare

In a statement, the biotech giant said it has informed all workers who attended the meeting and are symptomatic that they will be contacted by the public health authorities to be tested and that they must self-quarantine.

“Additionally, these employees are being asked to isolate from the people they live with (e.g. family members, loved ones or roommates) until further notice, and these close contacts must also be quarantined until further notice,” the company said in a statement.

Workers who are not showing symptoms of the virus are being asked to stay in quarantine until further notice, and the people with whom they live are being advised to avoid social interaction and to work at home.

Read:These nine companies are working on coronavirus treatments or vaccines — here’s where things stand

Coronavirus Fears and Democratic Primaries Send Markets Reeling

Two schools in Wellesley, Mass., closed early Friday, because a student’s parent who attended the Biogen meeting had tested positive, according to media reports.

See also:Facebook, Apple and Twitter ask staff to work from home due to coronavirus — now here’s the bad news for the rest of America

Biogen shares have risen 3% in the last 12 months, while the S&P 500

has gained 8%.

Read now:Should I cancel my flight? Will recirculated air on a plane spread coronavirus? Here’s what you need to know before traveling

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On eve of Brexit, Britain faces critical test to defend drug trial crown By Reuters

© Reuters. Petri dishes are pictured in an unknown location in a Cancer Research UK laboratory on an unknown date

By Kate Holton and Paul Sandle

LONDON (Reuters) – It’s 2023. Britain’s brightest and best drug researchers are packing their bags as clinical trials start to dwindle, leaving a nation renowned as a global leader in pharmaceutical development to face a future in the slow lane.

This is a worst-case scenario outlined by some scientists and industry experts in the wake of Brexit, which they say could deprive the country of its role as Europe’s leader in early-stage drug research, designing and hosting pan-EU trials.

Pamela Kearns, professor of pediatric oncology at the University of Birmingham, worries that over time Britain will in particular lose out in the field of medicines that treat rare diseases and childhood cancers, where trials often need to collaborate and recruit across Europe to find enough patients.

“It would be a real disadvantage to children in this country if we were not part of those networks,” she told Reuters. “It will disadvantage us massively.”

Kearns’s university sponsored the BEACON Neuroblastoma trial, held up as a model of cooperation, and the type of project that could be in jeopardy after Britain’s EU exit on Friday and a transition period that runs until the end of 2020.

The British designed clinical trial is testing a combination of drugs to tackle a rare aggressive cancer that affects children. It is partly funded by European groups, and is being trialled on patients across the continent.

Kearns said her team, among their Brexit contingency plans, had selected a legal representative within the EU – in Dublin – that could enable them to continue playing a key role in trials, as well as an EU distributor to supply drugs for patients.

It has also added new legal provisions to contracts should Britain no longer be covered by the bloc’s GDPR laws for exchanging data. Yet all these steps may only help in the long term if the UK stays closely aligned to EU research regulations.

Brussels is launching a new portal and database that will help co-ordinate the design, data collection and oversight of pan-EU trials, a system that Britain is likely to be excluded from after it fully leaves the bloc at the end of 2020.

Some company executives argue that fears of Britain losing ground are overly pessimistic though, and the country could in fact thrive under a nimbler drug development and approval system unshackled from 27 EU states.

“If you’re a single approver versus one with 28 people sitting around the table you can probably do things a little bit faster,” said Hugo Fry, UK boss of French drugmaker Sanofi (PA:).

Whether to diverge or align encapsulates the fundamental tension underlying Brexit: can Britain differentiate itself enough to make a success of the historic break, and does the freedom to innovate trump being part of a larger group?


Kearns’ concerns are echoed by UK pharmaceutical industry body the ABPI, which warns of a brain drain from a sector that contributes about 2.7 billion pounds ($3.55 billion) to the economy and around 47,500 jobs.

“Without the ability to influence the design of research programs, leading researchers are likely to move out of, or not move into, the UK and this loss of globally recognized and highly skilled researchers will drastically undermine the UK’s research base,” it said.

It is not only the United Kingdom that faces risks though; the European Union stands to lose the expertise of a country that has accounted for an average of 28% of EU clinical trial applications over the past 10 years.

Britain leads Europe in early-stage – phase I and II – trials, with particular strength in cancer research.

Industry experts, from academics to executives, say the best way to limit potential damage on both sides is for Britain to remain closely aligned to EU rules so researchers can maintain collaborations and prevent the duplication of costs and paperwork from having two separate regulatory systems.

But the nation’s decision to leave the bloc was driven by a desire to forge its own path, set its own rules and strike its own deals. Britain has previously said it will seek to align with the EU on clinical trials “where possible”.

“After Brexit, clinical trials will continue to be approved at a national level, working to international standards and we are determined to maintain the UK’s position as one of the best locations globally to run clinical trials,” the government said.

Britain’s leading role in developing drugs is underpinned by its research clusters that bring together publicly funded hospitals, top universities like Oxford and Cambridge and companies such as AstraZeneca and GSK.

However domestic expertise is often not enough.

A look at the work of leading charity Cancer Research UK illustrates how closely Britain is entwined with the continent; nearly a third of the roughly 200 trials currently being funded by the organization involves European collaboration.

Emlyn Samuel, its head of policy development, said the emergence of drugs that target tumors according to their genetic make-up rather than cancer type meant more trials would need to cast a wide net to find suitable patients.

“If we’re outside we might be able to move more quickly in some areas but I don’t think that outweighs the benefits of being part of a broader regulatory system,” he said.


Denmark’s Novo Nordisk (CSE:), a leader in diabetes drugs, has opened a research center in Britain. While fully committed to the country, it has concerns about the broad impact of Brexit.

“If there are processes that mean it becomes more complex then companies will look twice at, ‘Is this the first place to come and do clinical trials, or is it easier to recruit patients elsewhere?'” its UK boss Pinder Sahota told Reuters.

Britain’s Medicines & Healthcare products Regulatory Agency (MHRA) is however looking at how being independent of the EU could give it a freer hand to improve its systems, company sources say.

It could, for example, cut the time it takes to approve a trial design or complete the early phases. But some are wary in a testing industry with little room for divergence and risk.

By the time Britain has fully left the EU after the transition period, researchers on the BEACON trial will hope to be embarking on phase III testing.

Kearns has already had to reassure European partners it can continue to lead such trials. But she does fear for the future.

“We’ve got fantastic investigators in the UK … we’ve got a brilliant set of statisticians and trial methodologists and the expertise, so we’re very much the trusted partner to lead,” she said.

    “We could find ourselves in the position of going back to just following.”

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