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Weekly Market Insights

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.

The Markets (as of market close​ March 13, 2020)

While the hope may have been that it couldn't get worse, unfortunately, it has. The coronavirus has not only posed a significant health threat to millions of people worldwide, but its impact has been felt economically and in the stock markets, both here and globally. Last Wednesday, the World Health Organization officially designated the coronavirus outbreak a pandemic, having reached more than 100 countries and more than 100,000 reported individual cases. President Trump announced that he intended to suspend travel from certain areas of Europe to the United States for the next 30 days. He also proposed plans for $50 billion in low-interest loans to affected businesses and delaying the April 15 tax-filing deadline. And Congress approved about $8 billion in funding to develop virus treatments and provide financial help to states.

Stock markets reacted negatively to that news, plunging dramatically on Thursday. Not unexpectedly, some individual stocks were hit hardest, including airline and transportation stocks, retail and eatery shares, and energy stocks. The markets recouped some losses midday Thursday following the Federal Reserve's announced intention to infuse more than $1.5 trillion into short-term funding markets. But the spurt was short-lived as stocks suffered their worst single-day drop since 1987's Black Monday. Globally, stocks fared no better. STOXX Europe, Japan's Nikkei 225, and China's Shanghai Composite Index all suffered losses.

The sell-off continued into Friday, which looked poised to reach bear levels across most indexes. A late rally pushed stocks higher following the president's declaration of a national emergency last Friday afternoon. Whether this surge will carry over to next week remains to be seen. Nevertheless, each of the benchmark indexes closed last week in the red, led by the small caps of the Russell 2000 and the Global Dow. The Dow fell over 10% despite gaining almost 2,000 points late Friday. The Nasdaq and S&P 500 each managed to keep losses in single digits.

Oil prices continued to plunge last week, closing at $33.34 per barrel by late Friday afternoon, down from the prior week's price of $41.56. The price of gold (COMEX) also fell last week, closing at $1,532.80 by late Friday afternoon, down from the prior week's price of $1,674.30. The national average retail regular gasoline price was $2.375 per gallon on March 9, 2020, $0.048 lower than the prior week's price and $0.096 less than a year ago.

Market/Index

2019 Close

Prior Week

As of ​3/13

Weekly Change

YTD Change

DJIA

28,538.44

2​5,864.78

23,185.62

-10.36%

-​18.76%

Nasdaq

8,972.60

8,575.62

7,874.88 -8.17%

-​12.23%

S&P 500

3,230.78

2,972.37

2,711.02

-8.79%

​​-​16.09%

Russell 2000

1,668.47

1,449.22

1,210.13

-16.50%

-27.47%

Global Dow

3,251.24 2,883.29 2,470.43 -​14.32% -24.02%

Fed. Funds target rate

1.50%​–1.75%

1.​00%​–1.25%

1.​00%​–1.25%

​​-50 bps

-50 bps

10-year Treasuries

1.91%

0.70%

0.95%

-25 bps

-​​​​​96 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 budget continued to expand in February. The deficit was $235.3 billion last month following January's deficit of $32.6 billion. Last February, the deficit was $234.0 billion. Year-to-date, the deficit sits at $624.5 billion, $80.1 billion greater than the deficit over the same period last year. The largest source of revenue, individual income taxes, is $44.6 billion ahead of income taxes over the comparable period last year. Social Security continues to be the biggest expenditure, at $448.0 billion for this fiscal year, followed by national defense and Medicare, each of which has cost roughly $305.0 billion.

  • Consumer prices rose 0.1% in February, the same bump as in January. Over the last 12 months ended in February, consumer prices are up 2.3%. Despite energy prices falling 2.0%, increases in food and shelter prices were enough to push overall consumer prices slightly higher.

  • Producers saw their prices fall 0.6% in February after climbing 0.5% the previous month. Over the past 12 months ended in February, producer prices for goods and services have increased 1.3%. Prices for goods fell 0.9% in February, the largest decline since moving down 1.1% in September 2015. Over 60% of the broad-based February decrease can be traced to prices for energy, which dropped 3.6%. More specifically, gas prices fell 6.5% last month. Prices for services dropped 0.3% in February, the largest decline since last September. In February, over 70% of the decrease in prices for services can be traced to margins for trade services, which dropped 0.7%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

  • Prices for imports fell 0.5% in February after ticking up 0.1% the previous month. The decline in import prices was the largest decrease since a similar plunge last August. Since February 2019, import prices have fallen 1.2%. Import fuel prices decreased 7.7% in February, the largest monthly decline since the index dropped 7.8% in June 2019. Excluding fuel, import prices increased 0.3% in February. Export prices dropped 1.1% last month following a 0.6% increase in January. This marks the largest decrease in export prices since December 2015. Prices for exports declined 1.3% on a 12-month basis in February, after rising 0.4% from January 2019 to January 2020. Prices for agricultural exports declined 2.7% in February while nonagricultural export prices decreased 1.0%, pulled down by a drop in prices for industrial supplies and materials.

  • For the week ended March 7, there were 211,000 claims for unemployment insurance, a decrease of 4,000 from the previous week's level, which was revised down by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended February 29. The advance number of those receiving unemployment insurance benefits during the week ended February 29 was 1,722,000, a decrease of 11,000 from the prior week's level, which was revised up by 4,000.

Eye on the Week Ahead

Although the Federal Open Market Committee was scheduled to meet later this week, the Committee gathered in an emergency session this past weekend and cut the federal funds rate to a range of 0.00%-0.25% — a 100 basis point slash, which, along with other moves, is intended to stabilize markets and the economy. The rate cut follows the House of Representatives passing of legislation that would make testing for the virus free and provide paid sick leave to certain workers.

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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