3/13/20 Market Notes
Over the past three weeks the conversation has turned from ‘when will we hit Dow 30,000’ to ‘will we go below 20,000?’ A concern that was amplified on Thursday as the Dow Jones Industrial Average plummeted 2,352 points, roughly 10%, in its worst showing since Black Monday, the infamous 1987 market crash. The S&P 500 and NASDAQ lost about 9 ½% each while the small cap Russell 2000 index declined 10 ½%. Stocks started the day sharply lower, falling more than 800 points at the open, but recouped some of the early losses mid-day after the Federal Reserve announced a $1.5 billion liquidity injection into the banking system. But investors weren’t convinced that the measures would be sufficient to offset the risks and damage from the one – two punch of low oil prices and the coronavirus. The Energy sector lost a record 12/8%, while Financials, Industrials and Utilities all declined more than 10%. The Healthcare sector held up the best, with a 7.41% decline. Treasury yields continue to rebound, which is a positive sign, as the benchmark Ten Year Treasury yield ended above 0.85% and is trading at 0.93% early Friday morning. Overnight, European bourses are sharply higher, rising between 7 and 8 per cent, while their Asian counterparts are modestly lower. Premarket U.S. equity futures are pointing to a sharply higher open, hitting ‘limit up’, meaning that futures trading has been halted because they have risen past their circuit breakers. Oil prices are rebounding by more than 6% in early trading, as fears of demand destruction and oversupply diminished overnight. While we expect market volatility to remain part of the investment landscape for a while longer, we also believe that the sell-off is overdone and represents some long-term opportunities for investors. Coronavirus and other macro events are almost certain to dominate headlines and investor sentiment, however data and facts matter. Next week’s economic calendar has a lot of important data that will help investors gauge the early impact of COVID-19, this includes:
Tuesday: Retail Sales Data, Industrial Production, Capacity Utilization, Business Inventories, Home Builders Index
Wednesday: Housing Starts, Building Permits, FOMC Meeting & Chairman Powell’s press conference
Thursday: Philly Fed Manufacturing Index
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.