Turnaround Tuesday has carried into hump day with the Dow up well over 5% again today as of this writing.  As we mentioned in an earlier post, that means the Dow is on track for its first back-to-back up days for the first time since early February.  Remarkably, even with only two consecutive up days, the index is closing in on exiting a bear market. For that to happen, the Dow would need to close above the 22,310.32 level which is 20% off of the bear market closing low (Monday’s close at 18,591.93). At today’s high, the Dow was less than 300 points or 1.32% from that level.

As for the individual stocks contributing to the rally, Boeing (BA) deserves a lot of thanks.  The stock has been hit very hard during the sell-off. Whereas the stock has traded in the mid-$300 for much of the past two years and up to mid-February, as of late last week BA had fallen below $100.  That massive drop in price means that day to day movements in the stock would have a lesser impact on the level of the price-weighted Dow. In spite of this, BA has contributed over 400 points to the Dow’s rally in the past two days alone!  That is much more than any other stock in the index with the next biggest contributor being UnitedHealth (UNH) who’s 335.44 point contribution comes as its share price is currently around $100 more than BA.  BA’s contribution is also almost 200 points more than those of McDonald’s (MCD), Visa (V), and Apple (AAPL). Of all 30 Dow stocks, there is only one that is down over the past couple of days, subtracting from the index’s rally: Walmart (WMT). Given WMT has held up fairly well recently, its performance is yet another example of investors’ focus on the more beaten down names that we have noted earlier today and in last night’s Closer. Start a two-week free trial to Bespoke Institutional to access Closer and full range of research and interactive tools.

The way things have been moving on a minute to minute basis, nothing is guaranteed in this market, but the way things stand now, the Dow is on pace to break its streak of days without back to back daily gains at 32 trading days.  That’s right, not since February 6th have we seen the Dow finish the day in positive territory for more than a day at a time.  Looking back throughout history, there have only been a handful of other periods where the DJIA went this long or longer without two up days in a row.  The last occurrence was all the way back in 1984, and before that, you have to go back to 1969.  Other than those two streaks, there were also two other periods in 1931 where the DJIA went more than 30 trading days without back to back gains.  While the current streak ranks as tied for the fourth-longest on record, if the DJIA isn’t able to hold onto its intraday gains today, the current streak will extend out to a minimum of at least two trading days and that would move the current streak into second place overall.  Start a two-week free trial to Bespoke Institutional to access our Custom Portfolios, interactive tools, and full library of research.

Yesterday, the S&P 500 had one of its best days on record and the best day since 2008 as the index soared nearly 10%.  As we noted in last night’s Closer, for stocks that have been hit the hardest during the past month’s equity rout, yesterday’s buying spree was a very welcome sign.  Yesterday saw a massive “dash for trash” as the current bear market’s worst performers were the best performers in yesterday’s session. The average stock in the bottom 10% of performers over the course of the current bear market dating to February 19th was up an astonishing 18.1%. All five of the bottom deciles in the distribution of returns since the bear market began were up at least double-digit percentage points. On the other end of the spectrum, while the best performing stocks were still positive on the day, their rallies were much more muted as the average stock in the best-performing decile only rose 3.38%.  Start a two-week free trial to Bespoke Institutional to access nightly Closer and full range of other research and interactive tools

During tumultuous times, investors always turn to the sage advice of the Oracle of Omaha: Warren Buffett. With the S&P 500 down almost 30% from its record high back on February 19th, many are surprised from the silence out of Omaha. While Buffett is well known for weathering the worst market downturns and coming out stronger, the last several weeks have been just as painful on his portfolio as it has on the broader market. Fortunately for him, though, a mountain of cash has helped to cushion the blow of the decline.

Of Berkshire’s top holdings, the average stock is down 36.62% since the S&P 500’s last all-time closing high on 2/19 and down 34.82% YTD.  The worst performing of the portfolio’s holdings has unsurprisingly been an energy sector name, Occidental Petroleum (OXY), which is down roughly 75% this year.  On the other hand, Amazon (AMZN) has been a top performer in 2020 as it is currently up 3.5% YTD.  But neither of these stocks are particularly large holdings.  In the table below, we show the 20 largest holdings in the Berkshire portfolio as of the most recent 13F filing (in addition to positions in Davita (DVA) and Delta (DAL) which were added and disclosed more recently).  Apple (AAPL) continues to be the crown jewel with a 35.44% weighting in the portfolio.  At the S&P 500’s peak, Buffett’s position in AAPL was worth $79.3 bn, but the 26.7% decline since then has brought that value down to $58.13 bn.  The next largest position and the only other one taking up a double-digit percentage in the portfolio’s total weight is Bank of America (BAC) which is down even more dramatically at 42%.  Other notable weak holdings have been the airlines, Southwest (LUV) and Delta (DAL).  For clients with access, we have also created a custom portfolio of Berkshire’s reported equity portfolio so you can track these names.  Start a two-week free trial to Bespoke Institutional to access our Custom Portfolios, interactive tools, and full library of research.

The Russell 3,000 is currently down about 35% from its February 19th high. With such a substantial decline in the index in just over one month, it should come as no surprise that only a small handful of individual stocks are higher since the 2/19 peak. In fact, less than 2% of the index has risen in that time. The bulk of these stocks are Health Care names. As shown below, there are 28 Health Care stocks that have risen since 2/19 with two, Tocagen (TOCA) and Vir Biotechnology (VIR) having doubled in price in that time.  Sixteen other stocks have seen double digit percentage gains in that time.

Of the stocks that are up in other sectors, many appear to be plays on a socially distanced coronavirus world.  For example, in the Consumer Discretionary sector, the best performer has been food delivery and ordering app Waitr (WTRH) which has gone from $0.39 to $1.56. In that same vein, Domino’s Pizza (DPZ) has also performed well.  Outside of the Health Care sector, the only sector with a large number of stocks that are up are Consumer Staples.  As with many of these other stocks, these seem to be plays on the COVID-19 economy. Multiple grocers, wholesale stores, and food related names make the list alongside cleaning product company Clorox (CLX).  Additionally, despite the rout of Energy names, there also are four Energy stocks that have distanced themselves from the pack and risen since 2/19 — TNK, SWN, DHT, EQT.  Start a two-week free trial to Bespoke Institutional to access our full range of research and interactive tools.