Canned soup? Check. Frozen french fries? Check. Disinfecting wipes? Check.
Your portfolio is prepped for an outbreak.
The spread of coronavirus outside China hammered stock markets to start the week as investors feared the epidemic could paralyze parts of Europe and the United States and starkly raise the risk of a recession.
The two-day sell-off that started the week lopped 6.3% off the S&P 500 and wiped out $1.7 trillion in paper wealth. It was the worst two-day decline since 2015.
On Wednesday, the S&P dropped again, but only less than half a percent.
It’s hard to remember that just a week ago, the stock market was sitting at record highs, seemingly pooh-poohing the prospect that the outbreak, as bad as it was in China, posed a global economic threat.
Now, thanks to daily postcards from the virus’ travels around the world, investors have abruptly come around to the view that the outbreak is nowhere near finished. Monday was the stock market’s worst day in over two years, with the S&P 500 falling 3.4%.
And even the stocks that went up were a downer.
Clorox, best known for its bleach and disinfecting wipes, rose 1.6%. The company is up 6.8% this month alone, outperforming the S&P 500 by 10 percentage points.
Campbells Soup — which also makes Pepperidge Farm cookies and Snyder’s of Hanover pretzels — managed to climb during the day on Monday, although it has since joined the market’s march lower.
And Lamb Weston Holdings, which makes frozen foods like crinkle-cut fries, onion rings and cheddar cheese-stuffed jalapeños, is another rare positive, up 1.4% in February.
You don’t have to be a Wall Street analyst to get the message: Investors are betting that sales for these firms will rise as Americans prepare for an outbreak that government officials have stated is just a matter of time. Consumers contemplating a self-quarantine might want to have some of the products these companies make on hand, along with the medical masks that are already making a fashion statement from New York to Milan.
Betting on stress-hoarding of Mint Milanos may be a smart move. But the prices of other stocks also reflect the thinking of investors who have been dumping riskier investments in favor of long-standing safety plays.
MarketAxess, a bond trading platform, has slipped only slightly this week, making it a comparative overperformer. Investors are gobbling up government bonds: 10-year Treasury notes have surged in price — pushing yields, which move in the opposite direction, to panicky record lows.
Prices for gold, viewed by some as a store of value and a place nervous Chinese investors like to wait out a storm, have also risen. The gold miner Newmont Mining has had a great February: Its stock is up nearly 10%.
Fortunately, there is at least one stock that is up for optimistic reasons: Gilead Sciences, whose drug, remdesivir, is now in a clinical trial as a possible treatment for the virus. The pharmaceutical company’s share price has surged roughly 18% this month.
Stock investors tend to look on the bright side. In their worldview, the economy almost always grows. Profits rise. Share prices climb. And inevitably, they get richer.
They are also prone to wild mood swings, as their sunny exuberance periodically gives way to extreme fear.
Many market analysts argue that fear is a healthy ingredient in any market. And they bemoan the fact that it has been in short supply over the last nearly 11 years, as the stock market has climbed almost continuously — one of the longest stretches of growth on record.
Thanks to the coronavirus, fear is back. It’s the medical masks that are hard to find.