US Equity Markets posted gains last week amid wild intra-day swings, as volatility measures hit their highest level in 10 years. The gains came despite an obsessive focus on the growing number of coronavirus cases in the US and abroad, as concerns about the impact on economic activity continue. The S&P 500 rose 0.6% for the week led by the defensive sectors of Utilities, Consumer Staples, and Healthcare. For the year, the S&P 500 is now down 8.0%. The Nasdaq increased 0.1% for the week and is now down 4.4% for the year, while the Russell 2000 (small-cap stocks) fell 1.8% for the week amid rising domestic economic concerns to bring its losses for the year to 13.1%.
Global equity markets fared even better than US markets last week as the number of new coronavirus cases in China has leveled off. Despite the rising number of cases outside of China, Developed Markets rose 2.5% for the week to bring its losses for the year to 8.7%. Emerging Markets rallied 3.4% for the week in large part due to a 5.4% surge in Chinese equities, bringing its losses for the year to 6.8%.
US Interest Rates continued to drop sharply last week, hitting fresh record lows following an emergency 0.50% rate cut by the Federal Reserve to try to stem off the economic impacts from the coronavirus. The yield on the US 10-Year Treasury closed at 0.71% vs. 1.14% the prior week. Despite the rate cut, the Street continues to place a 100% chance for another 0.25% rate cut by the Federal Reserve at its meeting later this month (March 17-18). The market is pricing in the odds for a 0.75% cut at its March meeting at 56%.
Of Interest to Us
While we certainly know that equity markets can go lower, we are encouraged that the market low's made on Friday, February 28th amid the indiscriminate selling have held up thus far, especially in light of the rising volatility in the equity market last week. This comes as the number of active coronavirus cases globally continues to trend downward; while the data are constantly changing, the total number of active cases as of this writing stands at 40,941, a 30% decline from peak levels on February 17th.
for the week ending 3/6/2020
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