4/16/20 Market Notes
Weaker than expected earnings and a sharp decline in retail sales pressured stocks from the get go on Wednesday, pushing the Dow Jones Industrial Average 445 points lower (1.86%). The S&P 500 declined 2.2%, while the NASDAQ lost 1.44%, and the small cap Russell 2000 index fell 4.31%. As the first full set of data encompassing the impact of coronavirus comes in, investors and analysts are recalculating their expectations as they recognize that neither the best case nor the worst case scenario for the economy and consequently corporate earnings are likely to materialize. All sectors of the S&P were lower on Wednesday, led to the downside by the Energy sector as oil prices fell sharply on an unexpected rise in crude oil inventories. The Health Care sector faired best, declining about ½%, as earnings from United Health easily beat forecasts helping lift its share price by more than 4%. The Ten Year Treasury yield fell to 0.64% while shorter term yields flattened, effectively making the yield on the 3 month, 6 month and 1 year Treasury the same. European bourses are mostly higher in overnight trading, after Germany announced that its strict social distancing policies had sufficiently impacted the spread of covid-19 and that some of the lockdown policies would be lifted as early as this Friday. Asian stock markets are mixed, as the Japanese Nikkei is off by more than 1 ½%, while the Shanghai index is up a smidgen. The March Housing Starts and Building permits reports, which were released at 8:30 AM (EST) this morning showed a 22.33% month over month decline, slightly below expectations. The Philly Fed Manufacturing Index, which was revised downward after yesterday release of the Empire State Manufacturing Index release, showed a 56.6% decline in activity, about in line with the revised expectations. Weekly jobless claims came in at 5.25 million, slightly above the expected 5 million new claims. As many expect economic data to worsen over the coming weeks, none of these figures should be all that surprising and neither should the sharp jump in equity futures after the release of the data. As of 8:35 am, Dow futures are pointing to a 100 point plus gain at the open.
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.