The stock market surged higher on Friday, ending a brutal week for investors on a positive note. Specifically, the S&P 500 jumped 9.2%. It was the biggest one-day rise for the market index since October 2008. The market's gain helped offset steep losses in the market over the last few weeks as stocks have tumbled amid growing concerns about the impact of the coronavirus on the economy.
The broader market's big jump on Friday was fueled by sharp gains from stocks across many sectors. Restaurant stocks represented one of the many industries that saw nice gains on Friday. BJ's Restaurants (BJRI 5.83%), Chipotle Mexican Grill (CMG 4.15%), and Darden Restaurants (DRI 3.21%) all saw their stocks jump sharply.
Image source: Chipotle Mexican Grill.
Here's a look at these three restaurant stocks' gains on Friday.
|
Stock |
Intraday High |
Change by Market Close |
|---|---|---|
|
BJ's Restaurants |
19.6% |
10.6% |
|
Chipotle Mexican Grill |
8.7% |
4.5% |
|
Darden Restaurants |
10.5% |
10.4% |
Data source: Yahoo! Finance.
This is still a bear market
Restaurant stocks' big move higher on Friday was primarily driven by a big gain in the broader market. Investors seemed pleased with President Donald Trump's national address on Friday afternoon in which he declared the coronavirus a national emergency and detailed plans for curbing its spread. The President shared plans for the rollout of more coronavirus tests, for Alphabet (GOOG 2.45%) (GOOGL 2.30%) to launch a website that makes it easier for patients to self-diagnose their symptoms and decide whether they should get tested, and more. The overall market rose sharply at the conclusion of Trump's national address.
The market is still down sharply from recent highs. Since Feb. 19, the S&P 500 is down 20%.
Restaurant stocks were slammed in recent weeks
Restaurant stocks have been hit particularly hard during the coronavirus panic. Chipotle, Darden, and BJ's, for instance, are all down 32%, 45%, and 53%, respectively, since Feb. 19. All three stocks, therefore, have fallen significantly more than the overall market.
The big pullback by restaurant stocks amid coronavirus fears likely has to do with a growing number of store closures and event cancellations in efforts to mitigate the spread of the coronavirus. Some investors may worry that restaurants will see lower traffic or even close locations as part of ongoing efforts to fight against the illness. Chipotle has already announced free delivery through March, though it didn't cite the coronavirus specifically as the reason for the move. In addition, Darden Restaurants implemented a paid sick leave program a few days ago.
Of course, the operational challenges ahead for restaurant stocks may have already been more than priced in, given these stocks' massive sell-offs since mid-February.
