3/25/20 Market Notes
Stocks had their best day since 1933, as the Dow Jones Industrial Average rose 2,112 points or 11.37% on Tuesday. The S&P 500 and NASDAQ also had impressive gains, rising 9.38% and 8.12% respectively. Optimism that Republicans and Democrats could put their differences aside to agree on a massive stimulus bill, which they did late last night, was the primary reason for the rally. Five of the eleven sectors comprising the S&P rose more than 10%, led by the Energy sector which climbed 16.31%. The Consumer Staples sector, which has been one of the best performers during the sharp declines rose the least, gaining 4.84%. The Ten Year Treasury yield rose to 0.818%, as the U.S. dollar was mixed against major currencies. Oil prices gained about 1 ½%, while gold prices soared more than 6% to $1,665 per ounce. Asian bourses are mostly higher, while their European counterparts are mixed. Did Tuesday’s sharp rally signal a market bottom or change in sentiment, most likely not, as we expect some shocks to investors as March economic data begins to come to light. Yesterday’s Markit Manufacturing PMI was only slightly below forecasts, but the Service PMI report fell well short of expectations. Friday’s March Consumer Sentiment number will provide some insights, although the data won’t reflect the full impact of social distancing and quarantines. Earnings from companies like Lulu Lemon, due out on Thursday, will be interesting as it will give market participants the opportunity to listen to the companies forecast for the remainder of the year. The brunt of March Data will come next week, and will very much impact market direction. Moreover, while we expect markets to bottom well before the pandemic hits its peak, we believe that could still be several weeks away, as cases in New York City and other large metropolises are still rising exponentially. In spite of all this, it is clear that many great companies have seen their stock values plummet to very inexpensive levels, creating significant buying opportunities. Our investment committee continues to work diligently to identify those stocks that have the greatest downside risks, many of which we have already reduced position size or sold out of all together, as well as identify those companies that appear to be most attractive and are expected to outperform their peers over the coming 12 to 18 months.
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.