What do these four stocks have in common? In one way or another, they're all key to how American industry operates in the 21st century. II-VI manufactures components and crystals used to make industrial lasers, while IPG builds the lasers themselves. 3D Systems helped to pioneer the process of "additive manufacturing," more commonly known as three-dimensional printing of industrial products. And Nucor makes steel, using electric arc furnaces to melt scrap and form new metal.
They also got their clocks cleaned in today's early morning stock market rout, as each and every one of these stocks fell 10% -- or more.
Why did that happen? Last night, President Trump went on TV to announce a raft of measures aimed at halting the spread of the COVID-19 coronavirus and mitigating its effects on the American economy. Among these:
- Most "immigrants and nonimmigrants" will be banned from traveling from any of several European nations to the United States.
- Unspecified but "unprecedented ... emergency action" will be provided for financial relief for "working Americans [who] are impacted by the virus."
- Small businesses will be provided $50 billion in low-interest loans.
- And Congress will be asked to pass a law providing immediate payroll tax relief.
The latter three measures all clearly aim to pump money into the economy, and prevent consumer spending from falling. That makes sense, inasmuch as consumer spending provides the funds that eventually end up at the industrial companies that make the things consumers want to buy. The first measure, on the other hand -- the one making most of the headlines today -- holds the potential to significantly disrupt commerce between the U.S. and Europe at least, which would not be good for industry.
Result: Immediate 10%-plus sell-offs in the morning, which in some cases got worse as noon approached (II-VI, down 11.8%; 3D Systems down 14.3%); in one case better (Nucor, down "only" 9%); and in one case, a whole lot better (IPG Photonics, down a mere 1%).
Why is IPG Photonics bucking the trend today? That's an excellent question, and I'm honestly not sure I know the answer. None of the four companies named above has announced any news of particular note to explain their declines, nor has IPG said anything to explain why its decline is already reversing.
Can IPG continue to buck the trend, or will it get sucked back down by the market's downdraft? And what about the other stocks? Can they, too, bounce back from today's great fall?
That's also impossible to say. For the past couple of weeks, stocks of all stripes appear to be reacting much more to broad changes in the headlines than to any developments specific to their companies -- and without a crystal ball, there's no telling how tomorrow's headlines will read. All I can really say at this point is that, while it's discouraging to see so many stocks that we know and love go down, it's downright exciting to see so many stocks that we know (and still love) go on sale.
For investors who are bargain hunters at heart, today's market sell-off really isn't such bad news at all.