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Weekly Market Insights

The Markets (as of market close​ ​April 3, 2020)

Stocks continued to rally at the beginning of last week amid hopes of enhanced testing for COVID-19. But by the end of the day Wednesday stocks slid, with the S&P 500 and Nasdaq posting their largest single-day declines since March 18. Energy shares in particular were hit hard. The Dow fell 4.4% and the small caps of the Russell 2000 continued to collapse, dropping over 7.0% on Wednesday. Economically, the virus is overwhelming the job market, as the number of unemployment insurance claims broke records for the second consecutive week.

For the past several weeks Thursdays have become rebound days for the market, and last Thursday was no exception. The Dow and the S&P 500 closed the day up about 2.25%, while the Nasdaq picked up about 1.75%. Oil prices pushed higher on word of output cuts. But COVID-19 has shrunk the demand for oil, which will likely keep prices in check even with reduced production.

A dismal jobs report (see below) drove stocks lower by the close of trading last Friday. Analysts believe as poor as this report may be, it doesn't reflect the magnitude of the damage done by the virus. They point to the more than 10 million claims for unemployment insurance over the past two weeks as a further indicator that the worst is yet to come. As more information is released, investors will be able to assess the economic damage done by COVID-19.

After rallying to close the prior week with double-digit gains, investors reeled in those profits last week, pulling the benchmark indexes lower. The small caps of the Russell 2000 were hardest hit, falling more than 7.0%, followed by the Global Dow, the Dow, the S&P 500, and the Nasdaq, which was the only index not to fall at least 2.0%. The yield on the 10-year Treasury note fell to a three-week low as bond prices soared, also affected by the latest job figures.

Oil prices climbed higher last week following news that production would be reduced, closing at $28.79 per barrel by late Friday afternoon, up from the prior week's price of $21.57. The price of gold (COMEX) rose again last week, closing at $1,649.30 by late Friday afternoon, up from the prior week's price of $1,625.30. The national average retail regular gasoline price was $2.005 per gallon on March 30, 2020, $0.115 lower than the prior week's price and $0.686 less than a year ago.

Market/Index

2019 Close

Prior Week

As of 4/3

Weekly Change

YTD Change

DJIA

28,538.44

21,636.78 21,052.53

-2.70%

-26.23%

Nasdaq

8,972.60

7,502.38

7,373.08
-1.72%

-17.83%

S&P 500

3,230.78

2,541.47

2,488.65

-2.08%

​​-22.97%

Russell 2000

1,668.47

1,131.99

1,052.06

-7.06%

-36.94%

Global Dow

3,251.24 2,444.77 2,364.35
10.89% -27.28%

Fed. Funds target rate

1.50%​–1.75%

0.​00%​–0.25%

0.​00%​–0.25%

-3.29%

-150 bps

10-year Treasuries

1.91%

0.74%

0.58%

-16 bps

-​​​​​133 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

  • Reflective of the impact of COVID-19 and efforts to contain it, March saw employment fall by 701,000 jobs. For perspective, the average number of jobs added per month for the 12 months ended in February was 196,000. About two-thirds of the drop occurred in leisure and hospitality, mainly in food services and drinking places. Notable employment declines also occurred in health care and social assistance, professional and business services, retail trade, and construction. The unemployment rate spiked to 4.4%, the largest monthly increase since January 1975. The number of unemployed persons jumped 1.4 million to 7.1 million. The labor force participation rate, at 62.7%, decreased by 0.7 percentage point over the month. The employment-population ratio, at 60.0%, dropped by 1.1 percentage points over the month. The average workweek fell by 0.2 hour to 34.2 hours in March. The decline in the average workweek was most pronounced in leisure and hospitality, where average weekly hours dropped by 1.4 hours. In March, average hourly earnings increased by $0.11 to $28.62. Over the past 12 months, average hourly earnings have increased by 3.1%.
  • Not unexpectedly, purchasing managers saw manufacturing decline in March, impacted by COVID-19. In fact, according to the IHS Markit final U.S. Manufacturing Purchasing Managers' Index™, these were the worst downturns in output and new orders since the financial crisis of 2009. The overall deterioration in the health of the manufacturing sector was the fastest since August 2009. Emergency measures to tackle the spread of the virus also led to a solid fall in workforce numbers and business confidence, as factories laid off staff and shutdown.

  • The Manufacturing ISM® Report On Business® also saw survey respondents describe a downturn in manufacturing due to COVID-19. New orders fell notably, while production, prices, and employment also contracted.

  • Purchasing managers in service industries noted a significant drop-off in business activity for March. Also tailing off were new orders, employment, and prices.

  • The international trade in goods and services deficit was $39.9 billion in February, down $5.5 billion from January. February exports were $207.5 billion, $0.8 billion less than January exports. February imports were $247.5 billion, $6.3 billion less than January imports. Year to date, the goods and services deficit decreased $19.7 billion, or 18.7%, from the same period in 2019. Exports increased $1.1 billion, or 0.3%. Imports decreased $18.6 billion, or 3.6%.

  • According to the Department of Labor, the COVID-19 virus continues to impact the number of initial claims for unemployment insurance. Most claims are coming from services industries, particularly accommodation and food services. However, a significant number of claims involve health care, social assistance, and manufacturing. For the week ended March 28, there were 6,648,000, an increase of 3,341,000 from the previous week's level, which was revised up by 24,000. This marks the highest level of initial claims in the history of the series. According to the Department of Labor, the advance rate for insured unemployment claims jumped from 1.2% for the week ended March 14 to 2.1% for the week ended March 21. The advance number of those receiving unemployment insurance benefits during the week ended March 21 was 3,029,000, an increase of 1,245,000 from the prior week's level, which was revised down by 19,000. This is the highest level for insured unemployment since July 6, 2013, when it was 3,079,000.

Eye on the Week Ahead

For economic reports, the focus this week is on inflation. The latest price information is available for March with the Consumer Price Index and the Producer Price Index. Last month consumer prices inched ahead 0.1% and were up 2.3% over the last 12 months. Producers saw their prices drop by 0.6% in February and are looking for a strong rebound in March.

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 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.

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