4/1/20 Market Notes
The worst quarter for stock performance since 1987 has finally come to a close. The S&P 500 lost 20% during the quarter, after recouping nearly 18% of losses at its worst point about 10 days ago. Other indexes, both domestic and international, had similar or worse results, as the world is coming to grip with a very ‘new normal’. The moves over the past quarter were truly astounding, as the Dow Jones Industrial Average traded more than 30,000 points up and down in the past month, surpassing its total value at the height of the market. The first quarter of 2020 also saw oil prices drop 65%, the Ten Year Treasury yield briefly touching ¼%, and the release of the largest fiscal stimulus package in the history of our nation.
Looking beyond this past quarter, there are increasing reasons for optimism for investors. Cases of coronavirus in the New York City region are forecast to peak between April 12 and 15, and social distancing measures are clearly having a positive impact. Moreover, both the federal government and Federal Reserve have proven to be amongst the most creative and able people in the nation, acting swiftly and with a great deal of precision. The Federal Reserve Bank’s actions in credit markets have proven very helpful, while components of the stimulus bill are helping many small businesses weather this storm. None-the-less, caution is still warranted, as the United States is about to experience a staggering new number of COVID-19 cases and associated death. The expected figures are likely to have a significant impact on our psyche and consequently could have a negative impact on markets. As we’ve previously stated, we believe that markets are reasonably priced if the worst of this is over in late April or early May. However, should the national rise in coronavirus cases rise past May and require continued social distancing or self-quarantining through the summer months, more losses for stocks are almost guaranteed. To Wit: Premarket equity futures took a sharp turn lower after President Trump warned that as many as a quarter million American’s could die as a result of the virus.
On a non-market related note, this is also a time where the best in people can be seen. I’m certain that many of you have seen the news reports of the local pizza shop owner sending free pizza’s to the local hospital; the good Samaritan doing grocery shopping for elderly neighbors so that they don’t have to leave their homes; the small business owner taking out a loan or forgoing his salary to ensure he can keep paying his employees. There are countless stories of kindness and courage for all of us to focus on, and health permitting, doing our part for our community as well. This is a time when we can (are made to) appreciate the simple and small things. The next few weeks will be trying for sure, it will be up to each of us to make the best of a dire situation and prove to the world how kind and wonderful and human we truly are.
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.