What To Make Of Monday's Market Sell-Off

U.S. stocks were mostly lower Monday as the coronovirus continues to spread across. Here is a summary of how multiple experts reacted to the rough start to the trading week.

Benzinga · 01/27/2020 17:47

U.S. stocks were mostly lower Monday as the coronovirus continues to spread across. Here is a summary of how multiple experts reacted to the rough start to the trading week.

Key Level In S&P 500

If the S&P 500 index stays above the key 3,200 level it will be seen as a "very good" sign, TD Ameritrade's Chief Market Strategist J.J. Kinahan said on CNBC. Even if this level is maintained, investors may want to avoid buying stocks in large quantities.

"You should be a partial buyer at any time," he said. "You don't want to be both hands in, and I think doing something like that is foolish at any time."

Monday's sell-off can also be seen as part of a "normal" cycle after an "amazing" start to 2020, he said. The sell-off could reverse and the market experiences positive momentum if some China-focused companies like Apple Inc. (NASDAQ: AAPL) or Starbucks (NASDAQ: SBUX) issue encouraging statements in their earnings releases this week.

No Cut To Earnings

Recent market gains were fueled by optimism around the U.S.-China trade deal and a rebound in global growth, among other factors, David Lebovitz of JPMorgan Asset Management said on CNBC.

As such, recent gains were also in part the result of multiple contractions, which implies the market is merely re-rating back down. In fact, it would be too early to start slashing corporate earnings.

'The Panic People Have Been Waiting For'

Market pundits have been saying for some time that investors should take advantage of a sell-off in stocks and buy the dip, Jim Cramer said. But in this case, today is not the time to be buyers of the dip, except for a few names that stand to benefit from the Coronavirus scare.

For example, Owens & Minor, Inc. (NYSE: OMI) sells hospital gowns and apparel that would be used to help deal with infectious diseases, Cramer said. While this would be more of a "speculative buy," prior history favors Clorox Co (NYSE: CLX) as the stock rose 7% during the H1N1 outbreak.

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