US Equity Markets posted their worst week since 2008, as measures taken to contain the spread of the coronavirus temporarily shut down much of the US economy. The S&P 500 dropped 15.0% for the week, having now declined over 32.0% from the all-time highs hit only a month ago on February 19th. For the year, the S&P 500 has lost 28.7%. The Nasdaq fell 12.6% for the week and is now down 23.3% for the year, while the Russell 2000 (small-cap stocks) was down 16.2% for the week to bring its losses for the year to 39.2%.
Global equity markets fared better than US markets last week, as China posted relative outperformance as it returns to normalcy now that the coronavirus has been contained there. No matter, declines in Europe and Asia caused Developed Markets to drop 7.2% for the week, bringing its losses for the year to 32.5%. Emerging Markets fell 13.2% for the week and is now down 31.2% for the year.
US interest rates were volatile despite the Federal Reserve slashing the Fed Funds rate to a target range of 0.00% to 0.25% from 1.50% and engaging in numerous other actions to increase liquidity in the market and support the economy. The yield on the US 10-Year Treasury rose to over 1.20% during the week before closing at 0.96% vs. 0.98% the prior week.
Of Interest to Us
While US Treasuries did not move much on the week, rates on US Investment-Grade Corporate debt spiked to 4.58% from 3.20% the prior week, and average yields on muni bonds nationally rose to 4.02% from 3.02% the prior week. This suggests that investors are demanding higher returns from corporations and municipalities in the face of likely cash flow issues with the coronavirus.
for the week ending 3/20/2020
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