3/12/20 Market Notes
Stock prices fell sharply again on Wednesday and appear set for another rough day on Thursday, as investors begin to grasp the potential economic impact of the coronavirus. Stocks started the day to the downside, and selling quickly accelerated after White House officials acknowledged the seriousness of the virus and its potential impact, which will now include a travel ban to Europe. The Dow Jones Industrial Average declined 1,464 points (5.86%) to close in Bear Market territory, thereby ending the 11 year long Bull Market. The Dow’s drop was amplified as a result of an 18%+ fall in Boeing (BA) share prices, as the Nasdaq and S&P 500 each fell less than 5%. European and Asian bourses are down more than 5% in overnight trading, as oil prices fall another 6% to near $30 per barrel. The Industrial sector was hit hardest, falling 5.98%, while the Healthcare sector declined the least with a 3.91% drop. The Ten Year Treasury Yield ended at 0.858 bps, up 10 bps for the day and roughly 50 bps above its Monday intraday low. We expect continued market volatility over the next week or longer, with some days seeing sharp declines and other’s seeing equally sharp gains. The S&P 500 is close to testing the December 2018 lows of the market, a critical level according to market technicians. In addition to stock market losses, investors and their advisors (for those of you not working with an 1879 Advisor) are encouraged to review their bond portfolio, as credit risk has also risen sharply. Industries with the greatest exposure to COVID-19, as well as those most negatively impacted by low oil prices are likely to see downgrades of their bond ratings. Focusing of strong balance sheets, dividend coverage ratios and overall financial strength is paramount in this environment.
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.