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QUIT PLAYING GAMES WITH MY HEART – MARKETS PARTIALLY REGAIN MONDAY’S LOSSES DURING A ROLLER COASTER OF A DAY

“I’m trapped in a glass case of emotion.” - traders after the close last night

Stocks shot out of the gate like one of Jason Servis’ racehorses just after the opening bell rang, with the Dow rising nearly 1k points within the first few minutes of trading. A nice change of pace.

Traders went to lunch thinking everything was fine. In the time it takes to throw back three martinis and crack a few off-color COVID-19 jokes, stocks had erased nearly all of their gains. Ah, there we go. 

All was not lost though, as the markets rose higher before the final bell to recover from their intraday drop.

The brink of a bear

All three indices narrowly avoided bear market territory (which is a 20% drop from recent highs, and, if you couldn’t tell by context clues, is BAD). 

At their lowest points Monday, the S&P and Dow were just 0.9% and 0.2%, respectively, short of ending their 11-year bull runs. “Are we out of the woods yet?” – Taylor Swift. No, we’re not, Taylor, as all three markets are still deep in correction territory even with Tuesday’s recovery.

So, why the jump?

Uncle Sam is the hero we need, not the one we deserve. 

The White House stated Monday evening that it plans to address the slowing economic environment stemming from the CV and oil price concerns by potentially reducing payroll taxes, bailing out shale companies, and discussing free coronavirus tests for those without health insurance. *Market participants go from six to midnight* 

Donny Politics parlayed talking a big talk on Monday into yesterday’s meeting on Capitol Hill, where it was proposed that the payroll tax rate be eliminated for the rest of the year. Payroll taxes, as an FYI, are paid by employers, Joes, and Susans (read: employees like you and I) to fund federal programs like Social Security and Medicare. 

POTUS also threw out the idea (“just spitballing here, guys”) of helping the airline and cruise industries, and WH officials made sure to emphasize that the federal assistance to oil companies should not be considered a bailout. Those are IOUs, might want to hang on to those.

The bottom line...

While the general market environment ended green, energy, airline, and cruise companies seemed to benefit the most. Some energy companies even triggered single-stock circuits to temporarily halt trading, and Apache and Occidental saw gains of 13% and 15% on the day, thanks to reductions in spend and the potential that Russia and the Saudis could kiss and make up.

Airline stocks took flight after stating they’d cut domestic and international routes, ground planes, and freeze hiring to address the reduced demand, sending United and American both up 12% and 15% during trading.

And the rising tide raised at least two ships, with Carnival and Royal Caribbean both floating up 10.4% and 7.05% after Trump’s comments of potentially giving them a lifeboat.

What’s in store for today? Tune in to find out.

U.S. Stocks Rebound on Hopes for Virus Stimulus [Bloomberg]

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