By Paul Vigna 

With the start of a new quarter, the market entered another stretch of volatility.

The Dow Jones Industrial Average fell more than 4% Wednesday and swung more than 700 points from its high to its low Thursday before finishing the session up more than 2%. Crude oil once again approached $20 a barrel, before jumping 25% in a single session Thursday. Treasury yields fell back near their lows.

The market is absorbing information that was inconceivable before the coronavirus pandemic. It appears that state stay-at-home orders will likely to be measured in months, not weeks, and the rise in unemployment is unprecedented. There have been nearly 10 million new claims in the past two weeks.

As always, though, the market produced winners and losers this week.

Winner: "The 30 Green"

When the first quarter ended Tuesday, there were 30 stocks in the S&P 500 in the green through those first three months.

The biggest gainer was Regeneron Pharmaceuticals Inc., up 30%. The narrowest gainer was Microsoft Corp., up 0.01%.

Some of the other stocks will seem obvious. Clorox Co., up 13%, makes products that are in high demand. J.M. Smucker Co. (6.6%) and Hormel Foods Corp. (3.4%) are helping to feed us.

Gilead Sciences Inc. (15%) and Eli Lilly & Co. (5.6%) are health-care companies on the front line of developing treatments or vaccines for Covid-19, the illness caused by the novel coronavirus.

Netflix Inc. (16%), Inc. (5.5%) and Activision Blizzard Inc. (0.1%) are entertaining Americans while we hunker down. And tech companies like Nvidia Corp. (12%) and Akamai Technologies Inc. (5.9%) are building the infrastructure toward a cloud-based future.

A lot of these stocks are "recession blue-chips," said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management.

Consumer staples, health-care companies and mature tech companies have some traits in common, he said. They have few, if any, unprofitable quarters, and they have comfortable levels of cash on their balance sheets.

Twenty of the first quarter's winners pay dividends. Most of them have reasonable price-to-earnings and enterprise value-to-sales ratios. They don't trade at unreasonably high valuations. In short, these are fundamentally sound companies.

If the stock market was an Aesop's fable, these 30 would be the tortoises to the racing hares. We are learning again, painfully this time, that winning the race is about being slow and steady, not fast and cocky.

Loser: Macy's

This week, Macy's Inc. took the painful step of furloughing most of its workforce. With its stores closed and no money coming in, it didn't have much of a choice.

The market reacted as one would expect. Shares fell Wednesday to a low of $4.43. Fitch downgraded the company's debt. It was removed from the S&P 500.

Macy's certainly isn't alone among retailers. Tapestry Inc., which owns Coach, and Capri Holdings Ltd., which owns Michael Kors, were also downgraded. Gap Inc., Neiman Marcus Group Ltd., and mall operator Simon Property Group also furloughed thousands of employees.

There is a real possibility some retailers won't survive this crisis. There is something different about Macy's, though.

The chain was founded in 1858, the first department store, and became an iconic American business. Santa Claus worked at Macy's in "Miracle on 34th Street." The annual Thanksgiving parade in New York is sponsored by Macy's and ends at its doors. Its flagship store in Herald Square is possibly the most famous retail outlet in the world.

And right now, it is a company that exists more in name than in reality.

To be sure, brick-and-mortar retail has been in a three-decade downtrend. Like every other retailer, Macy's has been trying to survive in a world for which it wasn't built.

Sales and earnings have been down in four of the past five years. Its cash position has gone down in four of the past six years, according to data from FactSet. At the same time, it has spent money on capital expenditures every year and has about $4 billion in debt.

Macy's was essentially living paycheck-to-paycheck and trying to reinvent itself. It just couldn't do that and build up any kind of real buffer to get it through a crisis. Then a crisis hit. Which, if you think about it, makes Macy's pretty much like most Americans.

Looking ahead: Eye on Oil

The market will again be most closely focused on anything related to the coronavirus pandemic.

The Energy Information Administration's weekly petroleum status report comes Wednesday. The key here is to see the degree to which oil is moving through the sales pipeline, or just being stored in tanks.

On Wednesday, Costco Wholesale Corp. is set to release its March sales report, which should shed some light on the business as Americans stocked up on toilet paper and other necessities.

Write to Paul Vigna at


(END) Dow Jones Newswires

April 03, 2020 07:14 ET (11:14 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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