Market Recap - Market Retreats as COVID-19 and Growth Concerns Increase.

Market Retreats as COVID-19 and Growth Concerns Increase.

The stock market had its good days this week and its bad days. Unfortunately, the losses on the bad days outweighed the gains on the good days, so it was a losing week overall for the major indices.

The small-cap and mid-cap stocks were the hardest hit, yet the large-cap stocks also felt their share of pain as investors sold into recent strength, unnerved by the expanding economic, medical, social, and psychological impact of COVID-19, as well as misgivings about the U.S. economy’s rebound potential.

Oil prices jumped off the chart as one of the few winning standouts, soaring as much as 35% on the back of reports that Russia and Saudi Arabia could be close to agreeing to a production cut soon to stem the slide in oil prices. That speculation triggered a short-covering rally that translated into a rare week in which the energy sector (+5.4%) stood out as the best-performing sector.

The weakest areas were the utilities (-7.1%), financial (-6.8%), real estate (-6.2%), consumer discretionary (-4.7%), and industrials (-4.5%) sectors.

The stock market overall had a generally risk-averse mindset, evidenced by the outperformance of the consumer staples (+3.5%) and health care (+2.0%) sectors. The latter was underpinned by news out of Abbott Labs (ABT) early in the week that it has launched a point-of-care test that can detect COVID-19 in as little as five minutes and word from Dow component Johnson & Johnson (JNJ) that it identified a leading COVID-19 drug candidate that could be ready for human clinical studies as early as September.

Those positive developments notwithstanding, COVID-19 concerns soon ramped up again following a contention from members of the White House coronavirus task force that there could possibly be anywhere between 100,000 and 240,000 deaths in the U.S. linked to COVID-19. The latest data from Johns Hopkins show 6,921 deaths in the U.S. so far.

That sobering contention coupled with President Trump’s observation that the next two weeks could be a “very, very painful” time for the U.S. caused some mid-week pain for the market that culminated with a 7.0% decline in the Russell 2000 on Wednesday alone.

The real pain, though, was seen in the labor market.

Weekly initial jobless claims soared to a record 6.648 million, bringing the two-week total for jobless claims to 9.989 million. Those claims, however, were largely absent in the March employment report, which was based on the employment survey conducted the week of March 12. Even so, it was noted on Friday that nonfarm payrolls declined by 701,000 positions in March and that the unemployment rate increased to 4.4% from 3.5%.

In actuality, the unemployment rate is probably closer to 10% at this juncture. That thought kept the market in check on Friday along with increased concerns that the V-shaped economic recovery many are hoping for won’t be seen.

The arbitrary decision by states to issue stay-at-home orders, reports of confusion involving the application process for obtaining small business relief under the CARES Act, retailers extending store closures, airlines cutting capacity further, and reports discussing a second wave of COVID-19 cases popping up in China were other factors that exacerbated concerns about the U.S. economy’s rebound potential.

The underperformance of the small-cap and mid-cap stocks, which have a predominately domestic orientation, stood out as a manifestation of those concerns.

Market Recap - Stocks Rebound, Congress Approves Stimulus Bill, Jobless Claims Surge to Record Level

Stocks Rebound, Congress Approves Stimulus Bill, Jobless Claims Surge to Record Level.

The S&P 500 rebounded 10.3% this week, as investors stepped in to buy discounted shares of companies after Congress approved the $2 trillion stimulus package for households and businesses. The Dow Jones Industrial Average rose 12.8%, the Nasdaq Composite rose 9.1%, and the Russell 2000 rose 11.7%.

At one point this week, the S&P 500 was up 20% from its intraday low on Monday, largely due to stimulus expectations but also due to some short-covering activity, quarter-end rebalancing, and a fear of missing out on further gains.

The week did end on a lower note amid some profittaking interest, but all 11 S&P 500 sectors still finished noticeably higher. Seven sectors advanced at least 10%, including a 17.7% gain in the utilities sector. The communication services sector advanced “just” 5.5%.

Notably, initial claims for the week ending March 21 increased by 3.001 million to a record 3.283 million (Briefing.com consensus 525,000), which was above most expectations but also unsurprising given the slew of economic shutdowns aimed at slowing the rate of coronavirus infections. For the market, and Congress, it quantified how bad the situation has been for American workers.

The Fed, meanwhile, continued to ramp up its stimulus efforts. Specifically, the central bank lifted the $700 billion cap on its purchases of Treasury and agency mortgage-backed securities and said it will buy “in the amounts needed.” The Fed also established new credit facilities and said it will be buying investment grade corporate bonds, municipal debt, and U.S.-listed exchange ETFs for investment grade corporate bonds.

For good measure, Fed Chair Powell reiterated in an NBC “Today Show” interview that the Fed isn’t going to run out of ammunition and will continue to provide credit to places that need it.

Separately, President Trump set Easter (April 12) as a goal for when he would want the economy to reopen for business, which drew some criticism for it being too soon given that the number of coronavirus infections is still rising. This week, the U.S. surpassed China for the most confirmed cases of COVID-19. 

U.S. Treasuries advanced alongside equities this week. The 2-yr yield declined 14 basis points to 0.23%, and the 10-yr yield declined 19 basis points to 0.75%. The U.S. Dollar Index declined 4.4% to 98.32. WTI crude dropped 8.8%, or $2.08, to $21.65/bbl as little was done to aid the struggling oil industry.

Market Recap - Historic Sell‐off Steepens as Economy Continues to Shut Down

Wall Street endured wild swings this week, ultimately spiraling lower as the rapid spread of the coronavirus continued to lead to a shutdown of the economy.

The Dow Jones Industrial Average (‐17.3%) led the retreat with a 17% decline, followed by the Russell 2000 (‐16.2%), S&P 500 (‐15.0%), and Nasdaq Composite (‐12.6%).

No sector was spared in this week’s carnage with all 11 S&P 500 sectors losing more than 11%, including a 23.0% plunge in the real estate sector. Confidence was lacking among investors, businesses, and consumers despite additional stimulus efforts taken by central banks given the magnitude of the situation.

For instance, California and New York ordered stay‐at home restrictions; more companies withdrew guidance, suspended dividends, and temporarily closed operations, which led to many Americans without a job. The latter started to be quantified in the weekly initial claims, which increased by 70,000 to 281,000 (Briefing.com consensus 220,000) for the week ending March 14.

To support the financial system, the Fed slashed the target range for the fed funds rate to 0.00%‐0.25%, lowered the discount rate to 0.25%, announced a $700 billion quantitative easing program, increased its daily repo operations, established facilities for commercial paper funding and money market mutual fund liquidity, and coordinated with other central banks to enhance liquidity via standing U.S. dollar liquidity swap line arrangements.
A host of stimulus measures were also taken by other central banks, but investors continued to wait for a massive fiscal response.

Congress passed an $8.3 billion relief package that provides unemployment and sick leave benefits, and the FHFA suspended foreclosures and evictions for 60 days for enterprise‐backed mortgages. The $1 trillion+ fiscal stimulus package, which includes direct payments to Americans and aid for businesses, continued to be deliberated.

Oil prices tanked 24% one day, then rebounded 23% the next day after President Trump said he will get involved in the price war between Russia and Saudi Arabia at “the appropriate time.” The Wall Street Journal reported that Texas was also considering cutting oil production. For the week, WTI crude still declined 24.3% to $23.73/bbl.

Boeing went through a tumultuous week with shares losing more than 40%. The company asked for at least $60 billion of aid, including loan guarantees, for the aerospace industry; Nikki Haley resigned from the Board; and Reuters reported the company is mulling a production pause.

Even safe‐haven assets faced selling pressure this week in a move that suggested investors were raising cash, which contributed to the 4.1% surge in the U.S. Dollar Index (102.74). Gold futures declined 2.1% to $31.57/ozt, and although longer‐dated Treasuries were down big, they later recouped most losses. The 2‐yr yield declined 14 basis points to 0.37%, and the 10‐yr yield increased two basis points to 0.97%.

Market Recap - Another Volatile Week in the Books

Another Volatile Week in the Books.

This week featured the worst day since 1987, two-15 minute trading halts, stimulus/liquidity measures enacted from global central banks, and even an initial salvo in an oil price war. The S&P 500 (-8.8%), Dow Jones Industrial Average (-10.4%), Nasdaq Composite (-8.2%), and Russell 2000 (-16.6%) lost more than 8.0% apiece

The continued spread of the coronavirus around the globe prompted measures that are expected to reduce growth. Most sporting events in the U.S. were cancelled and a ban on most flights from Europe took effect at the end of the week. Lawmakers in Washington debated various options for fiscal stimulus, but it took the whole week to reach a tentative agreement on package that would allow for 14 days of paid sick leave, unemployment benefits, free virus testing, and small business tax relief.

The New York Fed conducted emergency liquidity operations at the end of the week after spreads on longerterm Treasury securities widened significantly. The ECB increased its asset purchases, the Bank of England made an emergency 50-basis points rate cut to 0.25%, and The People’s Bank of China lowered the reserve requirement ratio for some banks by 50-150 bps.

Separately, oil markets were facing a dual threat of weakened demand and oversupply after Saudi Arabia initiated a price war with Russia. Specifically, Saudi Arabia lowered its oil price for April delivery by $6-$8/ bbl and signaled production boosts for an oversupplied market after Russia failed to agree to production cuts last week. WTI crude collapsed 25.0% on Monday, surrendering 23.0% for the week.

In the U.S. Treasury market, the yield on the 10-yr note set a new all-time low at 0.40% but finished the week 24 basis points higher at 0.95%. The CBOE Volatility Index, which is commonly referenced as a fear gauge, surged almost 16 points to 57.83-- its highest level since the financial crisis -- as investors rushed for more protection against further equity weakness.

Market Recap -Weekly Advance Masks Bumpy Ride

The S&P 500 added 0.6% for the week. While that is technically true, the slight change masks the fact that the S&P 500 bounced around a 235‐point range since last Friday.

Coronavirus‐related fears remained top of mind, and the growing focus on new cases in the U.S. and abroad exerted pressure on the market’s expectations for growth. The Federal Reserve announced an emergency 50 basis point rate cut on Tuesday, but the fed funds futures market expected another imminent sharp cut the next day. Treasuries charged higher throughout the week, sending the 10‐yr yield lower by 42 basis points to 0.71%

Congress approved $8.50 billion in emergency spending measures while administration officials hinted at targeted stimulus. However, that did little to improve investor sentiment.

Countercyclical sectors like utilities (+7.9%), consumer staples (+6.2%), health care (+5.0%), and real estate (+4.8%) ended the week in positive territory with health care climbing after Joe Biden won the bulk of primaries on Super Tuesday, seizing the Democratic delegate count lead from Bernie Sanders.

Cyclical sectors bore the brunt of the pressure with energy (‐7.3%) and financials (‐4.1%) finishing at the bottom of the barrel. The energy sector fell as crude oil slid to its lowest level since mid‐2016 in the $41.00/bbl area. Reports from midweek suggested that OPEC would agree to a significant output cut, but Friday’s OPEC meeting failed to produce an agreement.

Market Recap- S&P 500 Endures Worst Week Since 2008

The stock market endured its worst week since 2008, as the S&P 500 fell 11.5% while the Dow Jones Industrial Average surrendered 12.4%.

Equities faced heavy selling pressure throughout the week as coronavirus-related fears caught up to the market, which appeared immune to these concerns just a week ago. The accelerating spread of the coronavirus outside of China was the main worry, leading to greater uncertainty about the viability of global supply chains. Intel (INTC) ordered its employees to avoid travel to China and several other countries, but on the bright side, Apple (AAPL) CEO, Tim Cook, said on Thursday that his company is working toward resumption of full production.

U.S. health officials acknowledged that the coronavirus is likely to spread through the U.S., which contributed to the pressure on stocks. The CBOE Volatility Index jumped more than 23 points to 40%, ending the week at its highest level since February 2018 when an inverse volatility ETN imploded.

The communication services sector (-9.5%) was the only group with a slimmer loss than 10.0% while the remaining sectors retreated between 10.4% (consumer staples) and 15.4% (energy). The growth-sensitive energy sector widened its Q1 loss to 24.7% while crude oil lost $8.54, or 16.0%, since last Friday, falling to its lowest level since late 2018.

Treasuries charged higher throughout the week, sending the 10-yr yield lower by 34 basis points to a fresh record low of 1.13%.

Market Recap - Stock Market Hits New Highs Mid-Week but Sells Off at the End

The S&P 500 (-1.3%) and Nasdaq Composite (-1.6%) set new intraday and closing records this week as investors remained unconcerned by the coronavirus, but stocks sold off to end the week amid a pervasively defensive tone. The Dow Jones Industrial Average lost 1.4%, and the Russell 2000 lost 0.5%.

The week started with Apple (AAPL), the world’s largest technology company by market cap, providing a revenue warning for the March quarter due to the coronavirus. Shares recouped initial losses a day later, as investors viewed the situation as temporary and China-specific, but it was hard to ignore the widening spread of the virus and the defensive positioning in the market.

U.S. Treasuries, gold ($1649.90, +67.20, +4.3%), and the CBOE Volatility Index (17.08, +3.40, +24.9%) advanced noticeably during the week, and barely moved even when the market hit new highs and momentum stocks like Tesla (TSLA) and Virgin Galactic (SPCE) extended their parabolic runs. Part of the defensiveness could be attributed to the elevated valuations in the market clashing with growth risks due to the coronavirus.

Cyclical sectors, and mega-cap stocks, underperformed, with the S&P 500 information technology (-2.5%), financials (-1.3%), and industrials (-1.2%) sectors leading the retreat. The defensive-oriented real estate sector (unch) was the lone group to avoid a weekly loss.

If one were to remain constructive on the market, one could point to this week’s upbeat economic data. Building permits climbed to a near 13-year high in January, weekly jobless claims remained at low levels, and the Philadelphia Fed Index surged to 36.7 in February (Briefing.com consensus 10.7) from 17.0 in January. The data wasn’t enough to prevent this week’s profit taking, though.

The 2-yr yield declined seven basis points to 1.35%, and the 10-yr yield declined 11 basis points to 1.47%. The U.S. Dollar Index closed 0.2% higher to 99.32 after setting a three-year high (99.61) during the week. WTI crude rose 2.8%, or $1.44, to $53.37/bbl.

Market Recap -Market Stays Bullish in February

It was another record-setting week, as the market remained undeterred by the coronavirus and stayed on its bullish trend. The Nasdaq Composite (+2.2%) and Russell 2000 (+1.9%) set the pace, followed by the S&P 500 (+1.6%) and Dow Jones Industrial Average (+1.0%).

Most of this week’s gains came on Monday as investors continued to pile into shares of mega-cap technology companies. Reports that highlighted the slowing rate of the coronavirus solidified the gains, and the market barely reacted to follow-up reports indicating a spike in new cases

All 11 S&P 500 sectors finished with gains, including four that rose at least 2.0% -- real estate (+4.8%), consumer discretionary (+2.6%), utilities (+2.4%), and information technology (+2.3%). The energy sector (+0.3%) underperformed despite a 3.1% bounce in WTI crude ($51.93/bbl, +1.58).

The Philadelphia Semiconductor Index regained momentum, rising 5.0% this week amid positive analyst recommendations and encouraging results and guidancefrom NVIDIA (NVDA). Shares of NVIDIA climbed 15% this week

The Philadelphia Semiconductor Index regained momentum, rising 5.0% this week amid positive analyst recommendations and encouraging results and guidancefrom NVIDIA (NVDA). Shares of NVIDIA climbed 15% this week

There was still a defensive tone, though, evidenced by the gains in the real estate and utilities sectors. U.S. Treasuries finished the week little changed from the prior week. The 2-yr yield increased three basis points to 1.42%, while the 10-yr yield remained unchanged at 1.58%. The U.S. Dollar Index advanced 0.4% to 99.12.

Market Recap-Stock Market Snaps Back to Record Highs

The stock market rallied to new heights this week, as investors looked past coronavirus concerns and drew support from positive fundamentals. The Nasdaq Composite outperformed with a 4.0% weekly gain, followed by the S&P 500 (+3.2%), Dow Jones Industrial Average (+3.0%), and Russell 2000 (+2.7%).

The prevailing view was that the economy is fine and any negative impact resulting from the coronavirus will be minimal, based on economic actions taken by China, reports of progress being made toward a vaccine, and upbeat U.S. economic data. In other words, the buy-thedip trade was backed by several positive developments this week

Ten of the 11 S&P 500 sectors contributed to the advance, especially the information technology (+4.5%) and materials (+4.2%) sectors. The utilities sector (-0.6%) was the lone holdout.

Data showed nonfarm payrolls grow by 225,000 in January (Briefing.com consensus 164,000), the January ISM Manufacturing Index return into expansion territory after five straight months of contraction, the ISM NonManufacturing Index accelerate for the second straight month for January, and weekly jobless claims fall to their lowest level in nine months.

China shored up confidence after it injected liquidity into its markets to help offset any impact from the coronavirus and said it will cut tariffs on $75 billion of U.S. imports by 50% on Feb. 14. In addition, reports indicated that the People’s Bank of China is planning additional stimulus that will encourage lending activity.

The coronavirus isn’t in the rear-view mirror just yet, as some companies like Walt Disney (DIS) and Nike (NKE) said it will have a negative impact on financial results, but the market is optimistic it won’t get worse. Apple (APPL) for its part temporarily closed its China stores but shares still rose more than 3% this week.

Tesla (TSLA) was arguably the story stock of the week after shares rose as much as 48.9% in a span of less than two days in a short squeeze. Shares finished the week higher by 15.0%. Separately, Alphabet (GOOG) reported revenue that was below expectations, but shares overcame initial weakness.

U.S. Treasuries finished the week lower, driving yields higher across the curve. The 2-yr yield increased seven basis points to 1.39%, and the 10-yr yield increased six basis points to 1.58%. The U.S. Dollar Index rose 1.3% to 98.69. WTI crude fell 2.4%, or $1.23, to $50.35/bbl, unable to draw enthusiasm from talk of possible OPEC+ production cuts.

Market Recap - Coronavirus Outbreak Causes More Widespread Selling

The stock market fell for the second straight week, as the continued outbreak of the coronavirus dampened risk sentiment and raised concerns about growth prospects. The S&P 500 (-2.1%), Dow Jones Industrial Average (-2.5%), and Russell 2000 (-2.9%) dropped more than 2%, while the Nasdaq Composite (-1.8%) fared slightly better.

The Nasdaq was the lone index to close the month higher (+2.0%). Losses were made most prevalent in the S&P 500 energy (-5.7%), materials (-3.5%), and health care (-3.3%) sectors. The consumer discretionary (+0.1%) and utilities (+0.8%) sectors finished higher, but the 7% post-earnings gain in Amazon (AMZN) helped mask the weakness in the consumer discretionary space.

Although investors tried to dismiss the seriousness of the coronavirus amid several buy-the-dip efforts, the virus was ultimately impossible to ignore. Reports proliferated about the rising death toll in China, the reduced economic activity in the region, the first confirmed case of a personto-person transmission of the virus in the U.S., and the growing cases around the world.

The World Health Organization declared a global health Week Ending 1/31/2020 emergency but did not recommend restricting the movement of people and goods since evidence showed it may be ineffective. That didn’t stop President Trump from enacting temporary travel restrictions or Delta Air Lines (DAL), United Airlines (UAL), and American Airlines (AAL) from suspending U.S.-China flights, though.

The underlying view was that a reduction in global economic activity would adversely impact the earnings expectations that lofty stock valuations have been predicated on. Others viewed the virus as a convenient excuse to take profits from a market that had gotten too overextended.

There were plenty of discouraging earnings news that fed into the growth concerns, too. Facebook (FB), Caterpillar (CAT), Visa (V), UPS (UPS), 3M (MMM), Pfizer (PFE), and DuPont (DD) were among the many disappointments. Tech titans Apple (AAPL) and Microsoft (MSFT), however, did report strong results.

Separately, the Fed left the target range for the fed funds rate unchanged at 1.50-1.75% and extended repurchase operations though at least April. The latter was perhaps the only surprising thing to come out of the policy meeting.

U.S. Treasuries ended the week with more gains amid the growth concerns. The 2-yr yield and the 10-yr yield dropped 16 basis points each to 1.32% and 1.52%, respectively. The U.S. Dollar Index declined 0.5% to 97.37. WTI crude fell 4.9%, or $2.63, to $51.58/bbl.