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Stock Market Wrap-Up: Coronavirus Masks Lift Honeywell; Cronos Leads Marijuana Stocks Lower

By Dan Caplinger - Mar 31, 2020 at 5:26PM

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Stocks dropped Tuesday on fears about the growing pandemic.

Wall Street finished the first quarter on a down note, as investors watched the Dow Jones Industrial Average (^DJI 0.08%) suffer its worst performance ever in the first three months of the year. Fears about whether the efforts to fight the coronavirus pandemic so far will prove sufficient continue to make investors nervous about committing to stocks. For the day, the Dow, S&P 500 (^GSPC -0.07%), and Nasdaq Composite (^IXIC 0.00%) ended up losing around 1% to 2%.

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Data source: Yahoo! Finance.

Some stocks have been able to see gains when they find ways to help in fighting against the spread of the COVID-19 disease, as Honeywell (HON 1.15%) did today. Yet the coronavirus crisis hasn't been a huge boon for marijuana stocks, and Cronos Group (CRON 0.66%) was the latest cannabis company to see some pressure in its quarterly results.

Unmasking an opportunity

Honeywell shares gained more than 1.5% Tuesday as investors reacted favorably to some news late Monday. The industrial giant will divert some of its production facilities toward providing much-needed medical supplies to healthcare professionals working with COVID-19 patients.

Honeywell will add extra manufacturing capabilities at its Honeywell Aerospace industrial site in Phoenix, with the intent of boosting its production of N95 face masks. The move adds to Honeywell's previous commitment to bring on new production lines at a facility in Rhode Island. All told, Honeywell hopes to make more than 20 million disposable masks each month in order to support the healthcare industry.

The new production should also help some of those who've lost their work as a result of the coronavirus pandemic. Honeywell said it would create more than 500 new jobs in Phoenix to manufacture face masks, bringing its total contribution on the employment front to more than 1,000 jobs nationwide.

Honeywell has taken a big hit in its core industrial business, especially given its important role in providing aerospace components and parts to an industry brought almost to a standstill by the disease. Nevertheless, it's doing the right thing by making its facilities available to support a worthwhile cause.

One marijuana leaf on top of a pile of $100 bills.

Image source: Getty Images.

Cronos goes lower

Shares of Cronos Group finished lower by 11% Tuesday following the release of its fourth-quarter financial results. Although the cannabis company kept seeing considerable sales growth, and posted a profit on a GAAP basis, massive operating losses show the difficulty that Cronos and others are having in being successful with their marijuana businesses.

Cronos posted revenue of $7.3 million during the fourth quarter, up from $4.3 million. That closed a year in which the cannabis company saw total sales almost double from 2018 levels. Yet a massive inventory impairment charge of $24 million contributed to an adjusted operating loss of $56.6 million for the quarter and brought total losses for the year to a whopping $114 million.

The company tried to emphasize the positive business developments it's seen recently, including new product lines, the IPO of its Australian affiliate, and efforts to strengthen its global supply chain. Yet what pushed Cronos Group's bottom line higher was a massive revaluation of the warrants it's issued -- a gain that counterintuitively reflects the decline in Cronos' stock price.

Cronos has steadily lost ground over the past year, and it faces many of the same challenges as other marijuana stocks. The marijuana ETF ETFMG Alternative Harvest (MJ -1.44%) lost 1.3% on the day. Many hope for an eventual recovery for the space, but Cronos will have to work harder to remain a leader in the budding industry.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Honeywell International Inc. Stock Quote
Honeywell International Inc.
$198.51 (1.15%) $2.26
Cronos Group Stock Quote
Cronos Group
$3.05 (0.66%) $0.02
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,336.67 (0.08%) $27.16
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,207.27 (-0.07%) $-2.97
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$12,854.80 (0.00%) $0.00
ETF Managers Trust - ETFMG Alternative Harvest ETF Stock Quote
ETF Managers Trust - ETFMG Alternative Harvest ETF
$6.15 (-1.44%) $0.09

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