May 1, 2020
We are hoping that this update finds you and your family safe and healthy.
Although the markets are still down year to date, April proved to be one of the best months since 1987 with the Dow, S&P 500 and NASDAQ being up at 11.0%, 12.6% and 15.4% respectively. If one had panicked during the worst part of March and went to cash, you would have missed one of the most tumultuous months for the stock markets followed by one of the best months.
Jobless claims have increased dramatically and are expected to have an impact on the markets until safe state re- openings happen on a broader scale.
The economic fallout is still unfolding. Companies who incorporated technology have reported better than expected quarterly growth over last year.
Although there are a number of drug companies working on various treatments, positive results from a clinical trial of Gilead’s coronavirus antiviral treatment candidate helped fuel a rally in stocks. Hopes for the near-term approval of a treatment and prospects that this could expedite a return to some semblance of normalcy are lifting the uncertainty and fear as parts of the country move to phase one of opening.
As expected, U.S. gross domestic product contracted by the most since the fourth quarter of 2008 in the first three months of the year, and consumer spending – the biggest portion of domestic economic activity – shrank by the most in 40 years.
The Federal Reserve has pledged to keep interest rates near zero for the foreseeable future, “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
Year to date the Dow, S&P 500 and Nasdaq are still negative -14.69%, -9.85% and -0.93% respectively. The 10-year Treasury is currently yielding 0.63%.
*Disclaimer: This report is a publication of Marchand Faries Financial Management, Inc. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgement of the author as of the date of publication and are subject to change.