3/27/20 Market Notes
Market participants ignored the exceptionally high unemployment claims numbers and instead kept their focus on the massive stimulus bill Congress passed, causing stocks to rally sharply for a third day in a row. The Dow Jones Industrial Average rose 1,351 points, while the S&P 500 and Russell 2000 gained a similar 6 ¼%. On a sector basis, Utilities and the Real Estate sector were the best performers, while Materials and Consumer Discretionary shares lagged. Oil prices fell more than 6%, while the U.S. dollar was mixed and Treasury yields were relatively flat. High Yield (junk) bonds, senior loans and municipal bonds all performed well, erasing sharp losses from earlier in the month as the Fed’s measures appear to be working. The sharp rebound in stocks over the past three days, amounting to a 20%+ rally, is clearly a result of investors focusing on the monetary and fiscal stimulus packages that are being implemented. While the rally is a welcomed event and to a large extent warranted, investors should be prepared for more volatility, as more data relating to the impact of coronavirus is released. Through yesterday, according to Johns Hopkins dashboard, global cases of the virus are doubling roughly every six days, with expectations of the sharpest growth rates in the United States still ahead of us. As such, we do not discard the possibility of markets re-testing the lows set early this week. None-the-less, there is a sense that one more good sell-off could signal a market bottom and clear the way for a new longer-term bull market. Looking ahead to next week, critical March economic data includes:
Tuesday: Consumer Confidence, Chicago PMI
Wednesday: ADP Payroll report, PMI & ISM Manufacturing data, Motor Vehicle sales
Friday: ISM & PMI Services data, March Unemployment Report and non-farm payrolls
Stay safe and well everyone, this too shall pass.
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.