3/6/20 Market Notes
Wall Street’s wild ride continued on Thursday, as the Dow Jones Industrial Average tumbled 969 points (3.58%), after a report showed a greater decline in factory orders than had been forecast. Market participants are now grappling with the thought that the economic impact of the coronavirus will be longer lasting and deeper than previously thought, potentially impacting first and second quarter corporate earnings. Moreover, it is clear that few believe that the Federal Reserve or any other Central Bank has the ability to overcome or offset the impact of coronavirus through Monetary Policy steps. While episodes of sharp volatility are stomach churning, they are also temporary and historically also ended abruptly. In the case of crisis driven market swings, such as the period we are currently experiencing, markets have historically calmed and rebounded well before the actual crisis has abated. As such, we strongly encourage investors to remain calm and focused on their long-term investment objectives. And, although our portfolios have held up well relative to the overall market, we are prepared to make further adjustments to the portfolios in an effort to further reduce down-side risks. We also encourage everyone to read our “Potential Economic Impact of COVID-2019” white paper, which was released yesterday. Asian and European bourses, as well as premarket U.S. equity futures are all down sharply overnight, as investors express their concerns over the virus. On a sector basis, Utilities, Real Estate and Consumer Staples, the more defensive sectors of the economy, have declined less than half of the broader market indexes since the beginning of the month. Overnight, the benchmark Ten Year Treasury Yield declined to a record low ¾%, while gold prices climbed to near $1,700 per ounce. The U.S. dollar and oil prices are both down sharply as well.
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.