The major stock market averages fell last week as the impact and uncertainty regarding the coronavirus pandemic continue to take a human and economic toll. For the week, the Dow Jones Industrial Average fell 2.7%, the NASDAQ Composite dropped 1.7%, and the Standard & Poor’s 50 Index lost 2.1%. For the first quarter, the Dow fell over 23%, its worst quarterly drop in over 30 years.
Stocks remain in bear market territory as the U.S. and global economy are largely in lockdown over the coronavirus. One snapshot of the economic impact is the number of Americans applying for unemployment benefits, which surged to 6.6 million last week, its second straight weekly record. Numerous companies are withdrawing earnings forecasts due to the rapid fall in economic activity and the inability to gauge what the future will look like. In short, we are in unprecedented and uncertain times, and the market does not like this level of uncertainty.
Remember though – the stock market is forward looking – and on a brighter note this week is beginning with a broad stock market rally. The Dow is currently up over 1,200 points, or about 6%, on hopes the pandemic may be peaking. Reports of slower new infection/death rates in some key parts of Europe, along with the first daily decline in coronavirus related deaths in the state of New York is encouraging investors that social distancing is working and that the peak may be sooner than some models indicated. It is still important to remain steady as the day to day numbers are extremely fluid and could easily reverse, which is why the most important thing to consider is the status of your allocation and investments for the long-term while monitoring the short term for risk and opportunity. We will continue to manage client portfolios for the long-term while remaining vigilant in the short-term.
As a reminder, stock and bond markets close early this week in observance of Good Friday. We hope you enjoy the long weekend – stay safe and be well during these difficult times.
All the best – Southport Station Financial Management, LLC