REGN Regeneron Pharmaceuticals Inc

By Paul Vigna 

The second week of March will be remembered as the one that saw the longest bull market on record end. The coronavirus epidemic morphed into a pandemic, businesses were left reeling, and investors were lost in a sea of red.

On Thursday, the Dow Jones Industrial Average suffered its worst one-day loss since Black Monday in 1987. It is down 26% this year. U.S. crude oil is down 48% over the same period. Gold is up, but copper, a bellwether commodity, is down more than 11%. Treasury bond yields are actually up for the week, though too little to give equities investors any comfort.

It was a week of almost nothing but losers, but there were a few winners as well. Let's take a look.

Winner: Gas Companies

There are only a handful of companies whose shares are up over the past month, and the reason is obvious. Regeneron Pharmaceuticals Inc. is working on a possible coronavirus treatment.

For Campbell Soup Co., people working from home, or sick at home, will be eating at home. The same theory applies for Take-Two Interactive Software Inc.: Those at home will have more opportunity to play games.

Then there are the natural gas companies. You might think in a week that saw the oil market crater, there wouldn't be any winners anywhere in the energy industry. But shares of companies like Cabot Oil & Gas Corp., Southwestern Energy Co. and EQT Corp. are rising.

Saudi Arabia's oil-price war is going to hurt U.S. oil companies. This is, somewhat ironically, good for natural gas companies.

Production of both oil and natural gas is expected to drop. But demand for natural gas isn't expected to fall. The result is likely to be a squeeze that would push prices higher. In the current state of world affairs, there are precious few industries that look to have pricing power.

EQT is up 18% this month, despite the worst equities selloff in more than a decade. Cabot is up 15%. Southwestern Energy is up more than 4%. Another natural gas producer, CNX Resources Corp., is down only 1%.

While the ultimate outcome of the oil-price fight isn't yet clear, "gas should be a safe(r) harbor than it is currently being valued," Bernstein analyst Jean Ann Salisbury wrote in a research note.

Loser: Managements

Just about everything and everybody in the market was a loser this week. The bull market is dead. Investors are being hit with wave after wave of selling. The corporate debt markets are roiling. The fears of a recession are climbing.

But there is one group that seems to be under acute pressure: management.

With companies scrambling to protect themselves from the economic fallout of the coronavirus pandemic, CEOs are under scrutiny.

Occidental Petroleum Corp. has been one of the hardest hit stocks in the S&P 500, down 64% this month alone. Damaged by the new price war in the oil market, the company was forced this week to cut both spending and dividends.

Now one of the company's most famous, and disgruntled, shareholders is coming after management. Carl Icahn ratcheted up his long-running fight with the company this week, disclosing that he now owns nearly 10% of the company's stock. With that position, he is demanding big changes: He wants to unseat the entire board and then get rid of Chief Executive Vicki Hollub.

Occidental isn't the only company fielding angry calls from its shareholders.

GameStop Corp. is under pressure from an investor group that owns about 7.5% of the company's shares. The group, which includes Hestia Capital Partners LP and Permit Capital Enterprise Fund LP, has been agitating for change for a year. They, too, are ramping up their campaign.

Even after GameStop appointed three new independent directors just this week, the group still wants its own representative on the board. They aren't happy with the company's performance and want their voices heard.

Elsewhere in C-suite news, United Parcel Service Inc. and Tupperware Brands Corp. both named new CEOs Thursday. Those are the latest in what has been a wave of change at corner offices since Robert Iger stepped down at Walt Disney Co. just over two weeks ago.

Next Week: Another Rate Cut?

There are very good reasons to question how much impact the Federal Reserve can have on the current situation. Even Fed officials have made the point. But they aren't powerless, which means the biggest event next week is the two-day meeting, March 17-18, of the Fed's rate-setting committee. On Wednesday, there will be a statement and a press conference with Chairman Jerome Powell.

The market is betting heavily on another interest-rate cut. Look out, also, for any surprises, like Thursday's surprise liquidity announcement, between now and then.

Write to Paul Vigna at paul.vigna@wsj.com

(END) Dow Jones Newswires

March 13, 2020 07:14 ET (11:14 GMT)

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