McDonald’s stock took a hit, dropping by as much as 10% following an E. coli outbreak that resulted in one death and ten hospitalizations in Colorado and Nebraska. The popular Quarter Pounder sandwich is believed to be the source of the outbreak. The company is working closely with government agencies, including the CDC, to identify the cause of the issue.
In response to the outbreak, McDonald’s stock plummeted from over $314 to the $280s before recovering slightly to close at $296, down 5.8%. The broader stock market, however, saw minimal changes with the Dow Jones Industrial Average and S&P 500 closing slightly down, while the NASDAQ advanced 0.18%.
The CDC has confirmed that the individuals affected by the outbreak had consumed Quarter Pounders from McDonald’s locations in Nebraska and Colorado. The company is taking immediate action by discontinuing the use of certain ingredients in specific areas to isolate the source of the bacteria and prevent further illness.
The news of the outbreak may have a negative impact on McDonald’s profits in the coming months. However, it has had a positive effect on the stock prices of competitors like Shake Shack and Wendy’s, which have seen an increase following the incident. Moving forward, McDonald’s will need to regain key resistance levels to signal a bullish trend in its stock forecast.
In the short term, McDonald’s shares are expected to seek support between the 100-day Simple Moving Average (SMA) near $277 and the 50-day SMA at $296. If the stock can reclaim the $306 level, it would indicate a positive trend for the company. Investors will be closely monitoring McDonald’s stock performance in the coming weeks to assess its recovery from the E. coli outbreak and its impact on earnings.
