4/23/20 Market Notes
West Texas Intermediary Oil prices jumped more than 20% on Wednesday, while its Brent Crude counterpart, which is much more widely traded and has more uses, rose 7%. The turnaround in oil prices, along with some better than expected earnings helped spur a market rally. The Dow Jones Industrial Average rose 456 points (1.99%), while the S&P gained 2.29%, the Nasdaq climbed 2.81% and the small cap Russell 2000 index appreciated 1.63%. All eleven sectors comprising the S&P ended higher, as the Energy (+3.58%) and Communication Services (+3.87%) led, and the Industrials, Healthcare, and Consumer Staples sectors lagged. Gold prices were up nearly 3% for the day, as the U.S. dollar strengthened, and Treasury yields rose. While investor sentiment and market direction are clearly still being driven by COVID-19 news, it is encouraging to see earnings outperformers being rewarded. As investors become accustomed to the new environment and what it means to markets, we expect a renewed focus on fundamentals such as earnings and economic data. Hence, we think that this morning (9:45 AM EST) release of the April Markit Manufacturing and Services data could impact market direction, as would tomorrow’s April Consumer Sentiment release. And while volatility is almost sure to remain part of the landscape, there is reason for investors to be optimistic. Notwithstanding some nasty headlines, the Payroll Protection Program(s) that Congress has approved is having a broadly positive impact. Moreover, the enormous amounts of liquidity that the Federal Reserve and Treasury Department have injected into markets and our economy will ultimately be a tailwind for markets.
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.