4/7/20 Market Notes
Stocks rallied sharply to start the week on the news that Italy was experiencing a sharp drop in coronavirus related deaths, and that in New York the rise in infection rates is slowing as a result of social distancing and 'stay at home' directives. Stocks rose about 7 3/4% as the Dow Jones Industrial Average gained 1,627 points. All eleven sectors of the S&P were higher, led by the Technology, Financial and Utilities sectors. Consumer Staples underperformed with a mere 3.92% gain. Oil prices did decline on Monday, in spite of reports that Saudi Arabia and Russia were nearing an agreement to cease their feud that has caused the sharp drop in oil prices. Gold prices continued to rise, and are now above $1,700 per ounce as investor confidence returns to the market. The Ten Year Treasury Yield rose as well.
In early trading, premarket equity futures are pointing to another sharp rise, as investors begin to see a light at the end of the tunnel. However, we continue to urge caution, as economic data reflecting the impact of COVID-19 and the extraordinary steps taken to slow its spread is yet to be released. Today's economic data releases will still reflect February data, making them nearly irrelevant. However, tomorrow's FOMC Minutes release and Fed Chairman's press conference, as well as Thursday's March Producer Price Index and April Consumer Confidence numbers could prove very impactful. While everyone knows the data will be bad, no one really knows how bad, hence the uncertainty that has been causing, and will likely continue to cause, sharp swings in the market.
In the meantime, having faith in a solid investment management process and making sure that your investment risk tolerance and goals are accurately reflected in your asset allocation is of utmost importance. If we're lucky the market will surprise us and the worst is behind us, but luck is no strategy. So, it is best to speak to your advisor so that they can communicate any changes to the portfolio management team. And while things are far from normal and we may remain under 'stay at home' directives for several more weeks, for those of us who have a back yard of balcony to step out to, enjoy the spring sunshine, the chirping of the birds and the smell of trees blooming. The world may be resetting itself, but everything will be just fine.
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.