3/11/20 Market Notes
The Dow Jones Industrial Average started Tuesday with a sharp rally, rising more than 900 points in the first 1 ½ hours of trading, before relinquishing those gains and dipping into negative territory. But, market participants were resilient in their belief that the sell-off is exaggerated, as buying renewed and ultimately drove the Dow to a session high 1,167 point (4.89%) gain. The S&P and NASDAQ each gained just under 5%, while the small cap Russell 2000 index lagged with a 2.52% gain. The Defensive Utilities sector underperformed with a 1.01% gain, while the Technology and Financial sectors, which had suffered the greatest losses in the past week and half, gained more than 6% each. The sharp rally in stocks coincided with a rebound in Treasury Yields, which saw the Ten Year Treasury yield double from its intra-day Monday low to end at 0.798%. Gold prices ended 1 ¾% lower at $1,646 per ounce, as the U.S. dollar strengthened across the board. Oil prices also rebounded a bit, rising 11% to $34.55, although WTI Oil remains down by more than 43% so far this year. While everyone’s focus continues to be on the coronavirus aka COVID-2019, economic data continues to be more resilient than most expect. The February Small Business Optimism Index came in slightly better than forecast, although analysts warn that the survey was taken before COVID-2019 appeared on U.S. soil, and will undoubtedly deteriorate sharply in March. This morning’s Consumer Price Index is expected to show little signs of inflation, as is tomorrow’s Producer Price Index data. Tuesday’s rally was in part fueled by President Trump and his administration’s proposal of a payroll tax cut / elimination through the end of the year, while Democrats in the House are said to be working on a different fiscal stimulus proposal. This morning’s U.S. premarket equity futures are pointing to a 700 point loss for the Dow at the open, as market participants express doubt that a fiscal stimulus package will pass quickly.
Disclosures: This market commentary is written by the 1879 Advisors and represents the views of 1879 Advisors. This commentary is not investment advice and should not be used as a basis to make investment decisions. Please consult with your registered investment advisor before making any investment decisions.