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Weekly Market Insights

The Markets (as of market close​ March 27, 2020)

Stocks opened the week as they closed the previous one — in a tailspin. However, aggressive moves by the Federal Reserve late in the day, coupled with the hope of a massive aid package from Congress, helped push stocks higher during early trading Tuesday.

News of the passage of massive stimulus legislation (see below) was enough of a positive impetus to send investors back to the markets in droves on Tuesday. The Dow surged to its highest single-day gain since 1933 as it climbed more than 11% by the end of the day. Unfortunately, as debate on the bill continued by the closing bell on Wednesday, the benchmark indexes gave back most of the previous day's gains. The Dow closed up 2.39%, marking the first back-to-back daily gains since the first week of February.

Passage by the Senate of the coronavirus relief package Wednesday night spurred investor optimism as stocks surged Thursday, despite a record number of unemployment insurance claims primarily due to the COVID-19 virus. By the close of trading, each of the benchmark indexes had posted sizable gains, marking a legitimate bull run. But how long will it last?

Unfortunately, the ride didn't last as long as hoped as stocks closed last Friday in the red for the day, but significantly higher than they began the week. Following a volatile week of stock prices, the week closed with the Dow recording its best weekly gain since 1938. Ultimately, the passage of the massive coronavirus rescue package, referred to as the CARES Act, gave investors enough encouragement to plunge back into the market. Each of the benchmark indexes listed here posted double-digit weekly gains except for the tech stocks of the Nasdaq, which climbed 9.0% nonetheless. Long-term bond prices also rose, pushing yields lower by the end of the week as 10-year Treasuries yields fell almost 20 basis points.

Oil prices reversed course last week, closing marginally higher at $21.57 per barrel by late Friday afternoon, up from the prior week's price of $19.84. The price of gold (COMEX) also spiked last week, closing at $1,625.30 by late Friday afternoon, up from the prior week's price of $1,498.90. The national average retail regular gasoline price was $2.120 per gallon on March 23, 2020, $0.128 lower than the prior week's price and $0.503 less than a year ago.

Market/Index

2019 Close

Prior Week

As of ​3/27

Weekly Change

YTD Change

DJIA

28,538.44

19,173.98 21,636.78

12.84%

-​24.18%

Nasdaq

8,972.60

6,879.52

7,502.38 9.05%

-​16.39%

S&P 500

3,230.78

2,304.92

2,541.47

10.26%

​​-21.34%

Russell 2000

1,668.47

1,014.05

1,131.99

11.63%

-32.15%

Global Dow

3,251.24 2,204.75 2,444.77 10.89% -24.08%

Fed. Funds target rate

1.50%​–1.75%

0.​00%​–0.25%

0.​00%​–0.25%

​​0 bps

-150 bps

10-year Treasuries

1.91%

0.93%

0.74%

-19 bps

-​​​​​117 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic Headlines

  • Late last Friday afternoon, President Trump signed the CARES Act, a $2.2 trillion relief package, which is the largest emergency aid package in U.S. history. The legislation provides expanded unemployment benefits including an extra $600 per week, forgivable small business loans, funds to help bail out larger employers hurt by the virus, and cash payments to Americans estimated to reach up to 94% of all tax filers.
  • The Federal Reserve called a third emergency meeting last Monday and unveiled a number of aggressive measures in an effort to help the American economy slowed by the coronavirus. In announcing its moves, the Fed warned, "it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate." The Fed's moves are aimed at calming corporate debt markets and offering direct lending to businesses. The Fed committed to the establishment of a Main Street Business Lending Program, similar to the Small Business Administration, to support small and medium-sized businesses with the availability of direct loans.
  • The third and final estimate for the fourth-quarter gross domestic product revealed that the economy grew at an annual rate of 2.1%, the same rate of growth as in the third quarter. In the fourth quarter, imports, private inventory investment, and consumer spending slowed, while government spending increased. Prices for consumer goods and services increased 1.4% in the fourth quarter. Excluding food and energy prices, consumer prices increased 1.3%. Consumer spending rose 1.8% in the fourth quarter, compared to an increase of 3.2% in the third quarter. The gross domestic product increased 2.3% in 2019, compared with an increase of 2.9% in 2018. Prices for consumer goods and services increased 1.4% last year, compared with an increase of 2.1% in 2018.
  • In February, personal income increased 0.6% and disposable (after-tax) income increased 0.5%. Consumer spending climbed 0.2%, while consumer prices inched up 0.1%. Prices less food and energy increased 0.2%. Over the past 12 months, consumer prices are up 1.8% as inflationary pressures remain muted.
  • Sales of new single-family homes fell 4.4% in February from the previous month. However, sales are 14.3% ahead of their February 2019 estimate. The median sales price of new houses sold in February 2020 was $345,900 ($325,300 in January). The average sales price was $403,800 ($384,000 in January). The estimate of new houses for sale at the end of February was 319,000. This represents a supply of 5.0 months at the current sales rate.
  • New orders for manufactured durable goods increased 1.2% in February, marking the fourth increase out of the last five months. A 4.6% increase in transportation equipment drove the February gain. Excluding transportation, durable goods orders decreased 0.6%. Nondefense new orders for capital goods climbed 0.5% last month. Excluding aircraft, new orders for nondefense capital goods dropped 0.8%.
  • The trade deficit for goods (excluding services) was $59.9 billion in February, down $6.0 billion from January's deficit. Exports increased by $0.7 billion while imports fell $5.3 billion.
  • For the week ended March 21, there were 3,283,000 claims for unemployment insurance, an increase of 3,001,000 from the previous week's revised level, which was revised up by 1,000. This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series. The previous high was 695,000 in October of 1982. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended March 14. The advance number of those receiving unemployment insurance benefits during the week ended March 14 was 1,803,000, an increase of 101,000 from the prior week's level, which was revised up by 1,000. This is the highest level for insured unemployment since April 14, 2018, when it was 1,824,000.

Eye on the Week Ahead

We are about to get more accurate information on the impact of the coronavirus on the economy with this week's economic reports on employment and manufacturing. We may also begin to see whether the recently passed support legislation affects the stock market.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Market summaries contain information on the Dow, S&P 500, NASDAQ, Russell 2000, Global Dow, Federal Funds interest rate, and 10-year Treasury yields, as well as highlights of past and future economic data.

The Markets (as of market close​ March 20, 2020)

Following the Fed's latest interest rate cut last weekend, stocks opened markedly lower on Monday, prompting the third circuit breaker in the last six sessions as trading was halted only seconds after the opening bell. By midmorning on Monday, the Dow had lost 8.5%, the S&P 500 slid 7.7%, and the Nasdaq fell 7.8%. By the end of the day, the Dow posted its worst percentage decline since 1987, the S&P 500 fell 12.0%, and the Nasdaq was off 12.3%. Business disruptions, store closures, and travel restrictions continue to drive the massive sell-off.

A late rally Tuesday pushed the major indexes higher, but the momentum was short-lived. Wednesday's futures triggered yet another circuit breaker. The stock market is now firmly in bear territory — more than 20% off its 52-week high. Despite new measures by the Federal Reserve and the European Central Bank late Wednesday, stocks continued to fall.

After Thursday's passage of legislation intended to provide some relief to those who are unable to work, coupled with an extension to file income taxes until July, stocks rebounded, somewhat. While Thursday's gains provided a brief respite from the constant sell-offs, stock values remain depressed. The Dow was down more than 32% from its February 12 high, while the other major indexes have all fallen more than 20%.

By the end of the week, each of the benchmark indexes fell by more than 10%, led by the large caps of the Dow and the small caps of the Russell 2000. The federal government closed U.S. borders with Mexico and Canada to nonessential travel. States like New York, California, and Illinois ordered their respective workforces to stay home. Investors saw these moves as more reason to fear that the worst is yet to come from the COVID-19 pandemic, prompting more stock sell-offs.

Year-to-date, the Russell 2000 is nearly 40% below its 2019 closing value. The Dow and Global Dow are each more than 32% off last year's pace. The tech-heavy Nasdaq has given up more than 23% from last year, which was a stellar one for this index.

Oil prices continued to plunge last week, closing at $19.84 per barrel by late Friday afternoon, down from the prior week's price of $33.34. The price of gold (COMEX) also fell last week, closing at $1,498.90 by late Friday afternoon, down from the prior week's price of $1,532.80. The national average retail regular gasoline price was $2.248 per gallon on March 16, 2020, $0.127 lower than the prior week's price and $0.300 less than a year ago.

Market/Index

2019 Close

Prior Week

As of ​3/20

Weekly Change

YTD Change

DJIA

28,538.44

23,185.62 19,173.98

-17.30%

-​32.81%

Nasdaq

8,972.60

7,874.88

6,879.52 -23.33%

-​23.33%

S&P 500

3,230.78

2,711.02

2,304.92

-14.98%

​​-​28.66%

Russell 2000

1,668.47

1,210.13

1,014.05

-16.20%

-39.22%

Global Dow

3,251.24 2,470.43 2,204.75 -​10.75% -32.19%

Fed. Funds target rate

1.50%​–1.75%

1.​00%​–1.25%

0.​00%​–0.25%

​​-100 bps

-150 bps

10-year Treasuries

1.91%

0.95%

0.93%

-2 bps

-​​​​​98 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic Headlines

  • The Federal Open Market Committee accelerated its meeting time to last weekend, holding an emergency session on Sunday, March 15. Following that meeting, the Committee decided to lower the target range for the federal funds rate to 0.00%-0.25%. This target range is expected to be maintained until the Committee is confident that the economy has weathered the economic storm caused by the coronavirus. The FOMC also indicated that it will continue to monitor information for the economic outlook, public health, and global developments and will "use its tools and act as appropriate to support the economy." The Committee also indicated its intention to increase its holdings of Treasury securities by at least $500 billion and its holding of agency mortgage-backed securities by at least $200 billion, in an attempt to enhance the flow of credit to households and businesses.
  • Not unexpectedly, retail sales fell in February, according to the latest report from the Census Bureau. Sales from retail and food services dropped 0.5% last month but remain 4.3% higher than sales from February 2019. Retail trade sales (manufactured goods resold to the general public) also fell 0.5% in February. Businesses suffering notable losses include electronics and appliance stores (-1.4%), building material and garden equipment and supplies dealers (-1.3%), gasoline stations (-2.8%), and food services and drinking places (-0.5%). Nostore (internet) retail sales increased 0.7% in February and are up 7.5% over the last 12 months ended in February.
  • Housing construction slowed in February as issued building permits (-5.5%), housing starts (-1.5%), and housing completions (-0.2%) each decreased from their respective January totals. Dwindling multifamily home construction pulled these totals down last month. Single-family building permits, housing starts, and home completions were all up last month.
  • Sales of existing homes rose significantly in February, climbing 6.5% from January. Overall, sales are up 7.2% year-over-year. The median existing-home price for all housing types in February was $270,100, 1.4% ahead of January's $266,300 median sales price. Total housing inventory sits at a 3.1-month supply. According to the National Association of Realtors®, February's encouraging sales pace is not reflective of the current impact of the coronavirus on the stock market and economy. Single-family home sales advanced 7.3% in February over the previous month. The median existing single-family home price was $272,400 in February, up 8.1% from February 2019.
  • According to the Federal Reserve, industrial production rose 0.6% in February after falling 0.5% in January. Manufacturing output edged up 0.1% in February, but it was still 0.4% below its level of a year earlier. Factory output was unchanged. The index for consumer goods rose 1.7% in February, as automotive products and energy products posted sizable gains. The index for mining declined 1.5%, but the index for utilities jumped 7.1%, as temperatures returned to more typical levels following an unseasonably warm January.
  • The number of job openings rose by 411,000 in January and the job openings rate increased to 4.4%, according to the latest Job Openings and Labor Turnover report. Job openings increased in finance and insurance (+65,000), federal government (+38,000), and mining and logging (+8,000). In January, the number of total hires fell by about 100,000, as did the number of total separations.
  • For the week ended March 14, there were 281,000 claims for unemployment insurance, an increase of 70,000 from the previous week's level. This is the highest level for initial claims since September 2, 2017, when it was 299,000. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended March 7. The advance number of those receiving unemployment insurance benefits during the week ended March 7 was 1,701,000, an increase of 2,000 from the prior week's level, which was revised down by 23,000.

Eye on the Week Ahead

This week is likely to see more government action to help ease the economic pain caused by the coronavirus. Economic reports such as durable goods orders, the gross domestic product, and personal income and outlays are for February, and are not likely to reflect the full impact of the COVID-19 virus.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Market summaries contain information on the Dow, S&P 500, NASDAQ, Russell 2000, Global Dow, Federal Funds interest rate, and 10-year Treasury yields, as well as highlights of past and future economic data.

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