Monthly Market Insights | April 2020

U.S. Markets

The spread of COVID-19 sent stocks tumbling, as the health and economic costs of the pandemic continued to mount.

The Dow Jones Industrial Average dropped 13.74 percent, while the Standard & Poor’s 500 Index fell 12.51 percent. The NASDAQ Composite lost 10.12 percent.1

When you reach the end of your rope, tie a knot in it and hang on. Franklin D. Roosevelt, 32nd President of the United States

Stocks moved sharply lower early in the month, as investors grappled with a string of troubling coronavirus headlines. Meanwhile, the markets kept an eye on the evolving coronavirus pandemic, while digesting both the Super Tuesday results and a drop in oil prices.

Swift Action

On March 15, the Federal Reserve cut interest rates to zero and announced several actions designed to support households and businesses. However, markets were unfazed by the Fed’s aggressive move, electing to instead focus on the contraction of economic growth that many are expecting.

As prices fell, the hospitality, real estate, and travel industries felt the immediate impact of the newly instituted social distancing rules. At the same time, financial stocks suffered losses on lower interest rates, while energy prices sunk to new lows in part due to lower oil prices.

The CARES Act

As the month came to a close, the passage of the $2 trillion CARES Act led to a historic jump in stocks and provided some much-needed support to the market. Stocks registered their best weekly performance since 1933, with the S&P 500 surging over 10 percent.2

However, stocks were mixed in the final days of trading, leaving the markets with losses for the month.

Sector Scorecard

All industry sectors ended lower in March, with declines in Communication Services (-12.69 percent), Consumer Discretionary (-13.58 percent), Consumer Staples (-4.12 percent), Energy (-36.78 percent), Financials (-19.48 percent), Health Care (-3.93 percent), Industrials (-18.24 percent), Materials (-13.37 percent), Real Estate (-12.97 percent), Technology (-7.32 percent), and Utilities (-7.14 percent).3

U.S. Market Recap for March 2020
S&P 500 -12.15% Month ‌ -20.00% Year-to-Date	NASDAQ -10.12% Month ‌ -14.18% Year-to-Date	Russell 1000 -13.38% Month ‌ -18.65% Year-to-Date	10-Year Treasury 0.70% Month ‌ -1.22% Year-to-Date
Yahoo Finance, March 31, 2020. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

What Investors May Be Talking About in April

Now that coronavirus testing appears to be ramping up in the United States, investors will be closely watching the status of new cases of COVID-19.

Keeping a Watch on Economic Data & Earnings

Investors are also expected to watch for fresh economic data that may provide some insight into the current level of economic activity. One example may be the weekly job claims for unemployment insurance, which could provide a preview of the overall health of the labor market in advance of the monthly jobs report.

Throughout the month, companies will be preparing their financials to report on first-quarter earnings. The reports may provide more information about how deeply firms have been impacted by the overall economic slowdown.

In any case, investors should brace for continued volatility, as market watchers believe it may take some time to recover from the pandemic’s impact.

World Markets

Stocks weakened globally in reaction to the growing COVID-19 pandemic, with the MSCI-EAFE Index dropping 13.88 percent.4

European markets were hit hard. France lost 17.21 percent; Germany, 16.44 percent; the United Kingdom, 13.74 percent. Italy also dropped 22.85 percent.5

Pacific Rim stocks were more mixed. Australia fell 21.18 percent, while Japan lost a more modest 10.53 percent, and Hong Kong, 9.67 percent.6

World Market Recap for March 2020
Emerging Markets	March	Year-to-Date
Hang Seng (China)	-9.67%	-16.27%
Kospi (Korea)	-11.69%	-20.16%
Nikkei (Japan)	-10.53%	-20.04%
Sensex (India)	-23.05%	-28.57%
Jakarta Composite (Indonesia)	-16.76%	-27.95%
Bovespa (Brazil)	-29.90%	-37.03%
IPC All-Share (Mexico)	-11.76%	-15.08%
Merval (Argentina)	-31.05%	-41.45%
ASX 200 (Australia)	-21.18%	-24.05%
Europe
DAX (Germany)	-16.44%	-25.01%
CAC 40 (France)	-17.21%	-26.46%
Dow Jones Russia Index (Russia)	-26.82%	-34.51%
FTSE 100 (Great Britain)	-13.74%	-24.93%
Yahoo Finance, March 31, 2020. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Indicators

Gross Domestic Product

The final reading of GDP growth rate for the fourth quarter came in at 2.1 percent.7

Employment

Employers added 273,000 jobs in February, a number that came in higher than economists estimated. While the number does evidence a healthy labor market, it also reflects a period in which the COVID-19 impact in the U.S. was in its early stages. The unemployment rate stood at 3.5 percent.8

Retail Sales

Retail sales declined 0.5 percent, a number below the 0.1-percent increase anticipated by economists.9

Industrial Production

Industrial production rose 0.6 percent in February.10

Housing

Housing starts declined 1.5 percent. Year-over-year, housing starts were 39.2 percent higher.11

Existing home sales jumped 6.5 percent, with tight inventories leading to an 8.0-percent year-over-year rise in the median sales price to $270,100.12

New home sales leaped 7.9 percent, reaching levels not seen since June 2007.13

Consumer Price Index

Prices of consumer goods rose 0.1 percent in February. Over the last twelve months, the CPI has increased by 2.3 percent.14

Durable Goods Orders

Orders of long-lasting goods rose 1.2 percent, a surprise jump. Economists had expected a drop of 0.8 percent.15

The Fed

On Sunday, March 15, the Federal Open Market Committee (FOMC) announced a rate cut in response to fast-changing market conditions stemming from the coronavirus pandemic.

The Fed cut its benchmark interest rate to nearly zero and announced several actions designed to support the flow of credit to households and businesses. The Fed maintained activity throughout the month with a string of new initiatives to support the U.S. economy and financial markets.16

By the Numbers