5/5/20 Market Notes
It was a volatile start of the week, as the Dow Jones Industrial Average fell by more than 200 points in early trading, before rallying in the last 90 minutes of the afternoon to end minimally higher with a 0.11% (26 points) gain. The S&P 500 rose nearly a ½%, as eight of the eleven sectors comprising the index rose. The tech laden NASDAQ gained 1 ¼% as the Technology sector along with the Energy sector led winners. Financials, Industrials and Real Estate were all down yesterday, after the U.S. Treasury stated that it will be borrowing $3 trillion this quarter alone.
The announcement by the U.S. Treasury came as a shock to some, and immediately stoked fears of inflation. In my view, there is very little risk of inflation in the near or intermediate term, as demand destruction continues to be the biggest concern for economists. And while it is true that at some point there will have to be a reconciliation and debts will have to be repaid, that day might be as far as 100 years away. After all, some members of the Treasury and President Trump floated the idea of issuing 100 year bonds late last week. Separately from the Dept. of the Treasury announcement, California became the first state to officially ask for Federal funds to help pay unemployment claims; more states are expected to follow suit.
Oil prices went on a wild ride as well, initially declining about 3%, before rebounding in the afternoon to end 4 ½% higher. The U.S. dollar and gold prices were both higher on Monday, as concerns over renewed trade tensions between The United States and China drove traders to safer havens.
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.