4/21/20 Market Notes
What can best be described as a trading anomaly and several poorly timed events drove April West Texas Intermediary Oil (WTI) futures into negative territory. While this certainly does not mean that oil is worthless or that gas prices will drop by half, it is emblematic of the environment the world is facing where demand for goods, services and in particular commodities has fallen sharply. While April WTI futures are expiring worthless, May WTI futures are trading around $16, a sharp drop and reflective of the environment, but not quite as dramatic as many news headlines made it seem yesterday. Equities started the day on the downside, but tried to recover a few times during mid-day before running out of steam and ultimately closing at the lows of the session. The Dow Jones Industrial Average fell 592 points (2.44%), while the S&P 500 lost 1.79% and the NASDAQ dropped 1.03%. Although Treasury yields were relatively steady yesterday, they are lower this morning as the sharp drop in oil prices is raising new and greater concerns over demand destructions. The U.S. dollar was higher yesterday, as were gold prices. This morning’s pre-market equity futures are pointing to a sharply lower open as market participants wait for several key earnings reports, including reports from Lockheed Martin (LMT), Coca Cola Company (KO) and HCA Healthcare (HCA) before the open and Netflix (NFLX) after the market close. On the economic front, investors will look for the March Existing Home Sales report, scheduled for a 10 AM (EST) release.
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.