Stock Market Today

Stock Market Today: Investors Head for Safety Amid Another Selloff

Wall Street didn't have an appetite for marijuana stocks on 4/20 ... or many other risk assets, for that matter. Instead, investors sniffed out defensive plays such as utilities and REITs.

Stocks stumbled for the second consecutive day Tuesday, and they did so again amid a fairly slow drip of news.

Both domestically and globally, a pickup in COVID-19 cases is fostering worries about the size and pace of the economic recovery, though at the same time, the world's number of vaccinated continue to grow.

"Stocks are dropping again today with no clear catalysts. Markets are a little stretched at this point, so we may see stocks take a small step back here and there. That's normal, and we'd expect any dip to be bought quickly," says Callie Cox, senior investment strategist for Ally Invest, who points out that recent action has come amid low trading volume. "As long as volume stays low and news is quiet, we may see this wandering market continue to search for direction."

When investors were buying, they were choosing safety: Utilities (+1.3%) and real estate (+1.1%) topped all other sectors Tuesday.

But the Dow Jones Industrial Average dropped 0.8% to 33,821. The Dow was led lower by the likes of Nike (NKE, -4.2%) which was downgraded on concerns over boycotts in China, and Boeing (BA, -4.1%), which dropped after CEO David Calhoun said its dividend likely won't be returning in the short term.

Meanwhile, the S&P 500 lost 0.7% to 4,134, and the Nasdaq Composite declined by 0.9% to 13,786.

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Other action in the stock market today:

  • Apple (AAPL, -1.3%) declined despite announcing a number of new products and updates Tuesday. The company unveiled more powerful iPads and thinner iMacs, both using M1 chips; a tile-like item tracker called AirTags, an updated Apple TV+ box and more.
  • International Business Machines (IBM, +3.8%) gained after the company reported its first quarter of revenue growth in more than a year and beat earnings expectations.
  • Johnson & Johnson (JNJ, +2.3%) beat top- and bottom-line estimates; meanwhile, the European Union said that while J&J's COVID-19 does appear to be linked to blood clot risks, its benefits outweigh those risks.
  • The Russell 2000 dropped 2.0% to 2,188.
  • U.S. crude oil futures dropped 76 cents, or 1.2%, to settle at $62.67 per barrel.
  • Gold futures added $7.90, or 0.5% to settle at $1,777.30 an ounce.
  • The CBOE Volatility Index (VIX) jumped another 8.2%, following a strong advance Monday, to reach 18.71.
  • Bitcoin prices recovered a little, up 1.0% to $56,650. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
  • Netflix (NFLX) was off by more than 11% in early after-hours trading after a wide miss on first-quarter global subscriber numbers. Specifically, global paid net subscriber additions of 3.98 million were well below the 6.2 million expected. The company did beat revenue and earnings projections.
stock chart for 042021

YCharts

4/20: A Buzzkill for Cannabis Investors

You might not have been aware, but today was a holiday for some: 4/20 is a date widely celebrated by marijuana aficionados … and increasingly, investors.

As it happened, weed stocks admittedly wilted under the spotlight today, despite yesterday's House passage of a bill that would let banks provide services to the industry in states that have legalized marijuana use. The AdvisorShares Pure US Cannabis ETF (MSOS), for instance, declined 3.2%.

However, many marijuana plays are still sitting on strong returns year-to-date, and several drivers still point to big long-term potential.

"With more states considering legalizing cannabis, combined with the future uptick in sales from states such as New York and New Jersey that have recently legalized recreational cannabis, I expect that cannabis sales will continue to experience strong growth," says Jason Wilson, cannabis and banking expert at ETF Managers Group, the issuer of the ETFMG Alternative Harvest ETF (MJ, -4.5%). "In the longer term, as the cannabis industry continues to mature, I would expect to see the strongest sales growth in derivative products, such as cannabis-infused beverages."

If you're feeling "canna-curious," start out by learning which red flags you should be watching for in this emerging industry.

If you feel you're ready to go, consider this list of 10 marijuana picks – complete with traditional stocks, but also real estate investment trusts (REITs), special purpose acquisition companies (SPACs) and even a couple funds for those interested in a more diversified approach.

Kyle Woodley was long BA and MSOS as of this writing.

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