The stock market suffered another big decline to begin the new week, triggering circuit breakers within seconds of the open. The Federal Reserve's emergency rate cut over the weekend brought short-term rates to zero, but investors are still impatiently awaiting whatever fiscal stimulus package might come from Washington. As of 11 a.m. EDT on Monday, the Dow Jones Industrial Average (^DJI -0.17%) was down 1,918 points to 21,268. The S&P 500 (^GSPC -0.60%) had fallen 208 points to 2,503, and the Nasdaq Composite (^IXIC -0.92%) had dropped 603 points to 7,272.
There were plenty of big drops among popular stocks, but a few were particularly noteworthy. Tesla (TSLA -3.10%) soared earlier this year, but concerns about the impact of the COVID-19 coronavirus have sent the stock lower recently. Meanwhile, Gap (GPS -3.64%) joined the growing list of retailers making changes to their operations, but investors seem to think more-extreme measures might prove necessary.
Will demand drive off a cliff at Tesla?
Shares of Tesla were down 15% as investors weighed the potential impact of the COVID-19 outbreak on the electric-vehicle maker's sales. Already, stock analysts following the company have low expectations, and things could get even worse before they get better.
Analysts at RBC Capital Markets cut their price target on the car stock by $150 per share to $380. The auto market more broadly has weakened considerably, and it's uncertain whether Tesla will be able to count on its typical end-of-quarter attempts to push delivery numbers higher through last-minute efforts. That has RBC thinking that full-year deliveries of Tesla vehicles could be extremely weak, and analysts cut their estimates by almost 160,000 vehicles to a new figure of 364,600.
Moreover, RBC sees potential problems persisting into 2021. The analysts' cut for next year was less extreme, reducing projections by about 46,000 vehicles to 572,100. Nevertheless, that skepticism highlights the level of uncertainty in the investment community right now.
Many Tesla investors see the value of the stock coming mostly from long-term future projects that haven't even been developed yet. Even so, the company's success will rely on the core vehicle business doing well in the near term, and some aren't persuaded that things for electric vehicles will go as well as hoped.
A stopgap for Gap
Shares of Gap plunged 23%, leading many retail stocks lower. The COVID-19 outbreak has forced people to stay out of public places, and that has retailers facing the harsh reality of having to cut back on hours or close stores entirely.
Gap announced Sunday that it would temporarily reduce store hours at locations across its network. Old Navy stores will now be open 11 a.m. to 8 p.m. Monday through Friday, with Athleta stores open 10 a.m. to 6 p.m. and other Gap concepts open 11 a.m. to 7 p.m. weekdays. Weekend hours systemwide will be 11 a.m. to 6 p.m., and Gap will close some of its stores based on guidance from local health officials. Previously, for example, an Old Navy store in Brooklyn was open 9 a.m. to 9 p.m. weekdays and Saturday and 9 a.m. to 8 p.m. Sunday. The Times Square store was open 8 a.m. to 1 a.m. weekdays and 8 a.m. to 2 a.m. weekends.
Even with those cuts, Gap isn't going nearly as far as some other retailers. Nike (NKE -0.20%), for instance, said it would close all its stores in the U.S. because of the outbreak, and other athletic apparel companies are following suit.
No one knows what life under the coronavirus will look like in the months to come, and measures that Gap and its peers are taking could prove to be just the tip of the iceberg. Big share-price declines reflect that uncertainty as much as they do the immediate loss of sales from shorter store hours.