3/20/20 Market Notes
Spring was (is) in the air in more sense than one. Oil prices rebounded about 25% to close above $25 per barrel, while the U.S. dollar soared against major currencies. Stocks and bonds also rallied, as the yield on the benchmark Ten Year Treasury fell by 10 basis points to 1.149, and the Dow Jones Industrial average and other major stock indexes all gained ground. The broad S&P 500 index climbed 0.47%, with eight of the eleven sectors comprising the index gained. The Energy and Consumer Discretionary sectors rose the most, while the defensive Consumer Staples, Health Care, Real Estate and Utilities sectors suffered losses. The technology heavy Nasdaq index climbed 2.3%, while the small cap Russell 2000 index gained 6.84%. Overnight international bourses rose, following in the U.S.s footsteps, as early premarket U.S. equity futures point to a sharply higher open, with Nasdaq futures hitting ‘limit up’. Looking ahead, investors should exercise caution and not become overly aggressive. While certain sectors and specific stocks certainly appear oversold, they may sell off further. We continue to expect a rapid rise in U.S. cases of coronavirus over the next few weeks. Moreover, beginning next week we will start getting the first sets of data that incorporate the impact of coronavirus, data that might shock the market as we are effectively only in the first week of broad social isolation. Economists are expecting. That said, there is certainly reason for optimism, as it is clear that much of the absent demand that is impacting businesses will prove to be pent-up demand. Moreover, now that Central Banks and governments around the world are coordinating both fiscal policy and monetary policy efforts, the broad base support should help stave off a great deal of long-term economic impact related to coronavirus.
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.