2/11/20 Market Notes
The ebb and flow of investor sentiment was once again prevalent in market direction on Monday, as the ‘Bulls’ clearly won out yesterday. The Dow Jones Industrial Average gained 170 points, or 0.60%, while the S&P 500 gained 0.73% and the technology laden NASDAQ rose 1.13%. On a sector basis, ten of the eleven sectors of the S&P rose, as the Energy sector was the sole looser on the back of a 0.81% decline in oil prices. The decline in oil prices continued to be demand driven, as traders fear that quarantines, production suspensions and shipping reduction will all have an impact, hence oil prices ended below $50 per barrel. The Ten Year Treasury Yield ended at 1.564%, indicating continued unease from fixed income investors, while the U.S. dollar strengthened against most currencies.
On the international front, European and Asian bourse are generally higher, as stronger than forecast earnings and decent economic news help offset fears surrounding the coronavirus. Premarket U.S. equity futures are also pointing to a higher open in early trading.
So far, the corona virus has caused more than 1,000 deaths and has spread to over 43,000 people, mostly in China. While it is very difficult to predict the ultimate impact of the virus, economists and strategists are already revising their first quarter GDP estimates, lowering them to as low as 1.2% according to CNBC. One indicator to look at to gauge the economic impact of the virus is Dry Shipping data, which has a very high correlation with international trade and commerce. In spite of the worrisome headlines and terrible human toll the virus has caused, we continue to believe that this will ultimately prove to be transient and have a minimal impact on the global economy.
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.