3/4/20 Market Notes
After a failure by the Central Banks of the G7 countries to come together and take coordinated policy action, Fed Chairman Jerome Powell announced an ‘emergency’ 50 basis point cut to the U.S. Fed Funds Rate. While stocks initially rallied on the news, they quickly capitulated and ended the session with an almost 3% loss. The Dow Jones Industrial Average ended 785 points lower, giving up about ¾ of Monday’s gains, while the S&P 500 and Nasdaq ended the session with similar per cent losses. All sectors of the S&P ended lower, with the more defensive Real Estate sector performing best with a minimal 0.10% loss, while the Financial and Technology sectors fared worst with near 4% losses. In addition to the wild swings in stocks, the discussion of the day was about the benchmark Ten Year Treasury Yield, which traded ended the session below 1%. Overnight markets seemed to have calmed a bit, as both European and Asian bourses are modestly higher, and U.S. premarket equity futures point to a sharply higher open. On the international front, the Fed’s rate cut and indication of further action appear to be the leading cause of the rebound. On the U.S. side, a strong showing by former Vice President Joe Biden on Super Tuesday seems to have invigorated investors. As of 7:00 AM Eastern Standard Time, Dow futures are pointing to a 685 point gain, as last night’s voting results effectively knocked Elizabeth Warren out of race, and greatly reduce the chances of Bernie Sanders become the Democratic party’s nominee. On the commodity front, oil prices are rallying a bit, as more production cuts by OPEC are expected, and some hope that the demand reduction associated with the coronavirus won’t be as bad as initially feared. Gold prices are giving up some of their early gains, but remain up early in the session, as the U.S. dollar regains some strength. Amongst key economic reports due out today are the ISM Non-Manufacturing and PMI Services reports.
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.