3/3/20 Market Notes
After suffering the most brutal week in over 12 years stocks mounted a phenomenal comeback to start the week and month. The Dow Jones Industrial Average gained nearly 1,300 points or just over 5%, as the S&P 500, Nasdaq and Russell 2000 indexes all rose sharply as well. On a sector basis, the more defensive Utilities, Consumer Staple and Real Estate sectors led the way, while a 9.31% gain in Apple (AAPL) shares helped make the Technology sector the second best performing sector of the day. The turnaround from last weeks’ deluge is being attributed to stocks having sold off too much, a natural tendency of stocks to rebound and the expectations of the Federal Reserve and other major Central Banks around the world easing monetary policy. The U.S. dollar fell as a result of the expected lower interest rates, while the benchmark Ten Year Treasury Yield touched 1.03% before rebounding sharply to 1.16%. Gold and oil prices also rose after China announced a reduction in one of its key interest rates. European bourses are following in the U.S.s footsteps, climbing about 2 ½%, while their Asian counterparts are mixed, as China’s Shanghai index is up nearly 1%, while the Japanese Nikkei Index is down more than 1% after its Central Bank indicated a reluctance to add further stimulus to its economy, investors had hoped for a globally coordinated monetary policy move. While the sharp rebound in stocks is very welcomed by market participants, investors should brace themselves for more volatility in the coming weeks. The economic threat of the coronavirus is neither over nor fully understood yet, and data associated with its impact in Europe and the United States is now just being released. None-the-less, we expect the economic impact of the virus to be transitory, and ultimately proving meaningless to long-term investors.
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.