3/31/20 Market Notes
The rebound in stocks continued on Monday, bringing the total gains since last Monday to more than 15% in what can only be described as volatile trading. Major indexes rose more than 3% yesterday, as investors are betting that the combination of social distancing, $2 trillion plus in fiscal stimulus and aggressive monetary policy steps will lessen the length of the crisis and its economic impact. All eleven sectors comprising the S&P were higher, led by Technology, Consumer Staples and Health Care. The Energy sector lagged, as oil prices continued to decline, trading below $20 per barrel.
Fixed income markets continued to stabilize and appear to be functioning relatively normally with the heavy handed support of the Fed, which continues to inject billions of dollars into the system to assure its stability. The Ten Year Treasury Yield is just below 0.70%, while short-term yields have reverted to being positive and the yield curve is upward sloping. European fixed income markets have also stabilized, and the U.S. dollar is stronger.
This is the week market participants will begin getting March economic data and thereby getting their first real look at the economic toll this unprecedented environment is causing. Although everyone knows that the data will be horrific, markets are still expected to react with greater volatility. The most important remaining question regarding all of this continues to be “when will this be over?” A questions that no-one is able to answer at this time. None-the-less, there are ‘green-shoots’ investors should also focus on. The reality is that the aggressive response by the Fed and Federal Government will have a significant positive impact on the economy. Furthermore, there are indications that the social distancing steps being taken are helping reduce the rate of infections and are ‘flattening the curve’. Lastly, it is clear that many stocks have been oversold in a ‘throw the baby out with the bathwater’ overreaction in the last few weeks, hence there is value to be derived and smart investment decisions to be made.
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.