2/28/20 Market Notes
In spite of better than forecast economic data, and continued optimism by many corporate chieftains that their businesses will overcome the impact of the coronavirus, the global stock sell off continue on Thursday. Within the first hour of trading the Dow Jones Industrial Average fell by nearly 900 points, before climbing back to trim its losses to a mere 140 points by early afternoon. However, market participants were spooked by reports of secondary infections in the United States, sending the Dow 1,190 points lower by the end of the trading session. The S&P 500 declined the same 4.42%, as the Technology, Energy and Real Estate sectors all declined by more than 5%. The Ten Year Treasury Yield touched 1.25%, an all-time low, before rebounding to end the day at 1.285%, as the U.S. dollar weakened on rising expectations that the Federal Reserve will need to cut rates in the second quarter. Oil prices ended in bear market territory, falling another 3.7% to $46.92 per barrel, as supply chain and demand fears permeated the market. Although investors are ignoring economic data at this time, instead focusing on the coronavirus, the data is important and will ultimately impact future economic growth and corporate earnings. To that end, there are some ‘green-shoots’ for investors to focus on. Fourth quarter GDP came in as expected at 2.1%, while January Durable Goods Orders only fell 0.2%, compared to an expected decline of 1%; and Pending Home Sales jumped more than forecast in January. Separately, while the Fed would rather not have to take any policy actions, officials have stated that they are prepared to do so, should the economic outlook deteriorate to a level that warrants action.
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.