News about coronavirus drugs in development gave the market an early spark on Monday, but this time it wasn't Gilead Sciences' (GILD) remdesivir – it was Pfizer (PFE, +4.1%) and smaller BioNTech (BNTX, +10.6%). The FDA granted the two companies a Fast Track designation for a pair of COVID-19 vaccine candidates that are currently in early-phase clinical studies.
PepsiCo (PEP, +0.3%) also delivered some good news in the form of a second-quarter profit beat ahead of meatier reports on this week's earnings calendar.
But a rip-roaring morning turned volatile as the day went on, and the rally eventually unraveled in spectacular fashion as California moved to close indoor operations of restaurants, bars and movie theaters across the state, as well as other businesses in 30 counties. Tesla (TSLA), for instance, gained as much as 16% before swinging to a 3.1% loss.
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The Dow ultimately dropped 553 points from its peak to finish just 10 points higher to 26,085. The S&P 500 declined 0.9% to 3,155, and the Russell 2000 fell 1.3% to 1,403. Tech stocks lost some steam, sending the Nasdaq down 2.1% to 10,390.
Use Volatility to Your Advantage
Before worrying too much about this being the beginning of the end, remember: Many analysts were expecting a volatile (albeit ultimately go-nowhere) summer but rosier results down the road.
"Clearly, the market has been in a consolidation period since early June; however, we still believe in our fundamental core thesis," writes Canaccord Genuity analyst Tony Dwyer. "More specifically, historic levels of credit and liquidity, coupled with the turn in the global economy, should cause any periods of consolidation to be resolved to the upside – even with weak Q2/20 EPS reports and cautious comments from management teams.
"We are in unprecedented times with substantial health, economic, social, and political unknowns – so trying to predict the day-to-day volatility is impossible. But the majority of our data continues to point to intermediate- to long-term opportunity in the economic reopening theme as we move into 2021."
Volatility isn't exactly pleasant for investors, but you can make it work in your favor. Specifically, you can use market dips to pick up attractive-looking companies – the types of firms you'd be happy holding for years – for a small discount.
A number of stocks already look like values, such as these 10 picks with healthy balance sheets. But consider putting together a wish list of stocks that would look a little better after a 5%-10% drop.
Dividend stocks are a great "two-fer," as dips land you not just better prices, but slightly higher yields. We often tout the virtues of the Dividend Aristocrats – 65 S&P 500 dividend payers that have paid cash distributions unchecked for a quarter-century or more. But you can find Dividend Aristocracy outside our borders, too; dividend growers abound in Canada and Europe, too.
If you're looking for a one-stop shop of the world's best dividend growers, however, read on as we highlight 91 of the world's top dividend stocks from across a dozen countries (including the U.S.).
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