In this week’s recap: Markets swing upward as the Federal Reserve and Congress move stimulus forward.
Weekly Economic Update
THE WEEK ON WALL STREET
An
open-ended commitment by the Federal Reserve to support American businesses and
capital markets along with the passage of a $2 trillion aid package improved
investor sentiment and drove a strong rally in stock prices.
The
Dow Jones Industrial Average jumped 12.84%, while the Standard & Poor 500
gained 10.26%. The Nasdaq Composite index rose 9.05% for the week. The MSCI
EAFE index, which tracks developed overseas stock markets, increased by 12.03%.1-3
Stocks Rebound
A
stunning string of Federal Reserve initiatives and the passage of a $2 trillion
aid bill buoyed stocks this week, with the Dow Jones Industrial Average jumping
by over 11% on Tuesday, its best day since 1933. Stocks continued to strengthen
the following day, registering their first back-to-back gains since February.4,5
Despite
a record 3.28 million jobless claims, stocks added to their gains for a third
straight day. Stocks gave back some gains on the final day of trading to end an
otherwise welcomed week of positive price action.6
A Shift in the Conversation
The
conversation around the domestic spread of the coronavirus has been centered on
“flattening the curve,” with closures of local businesses and schools, a shift
to working from home, and appeals for social distancing.
Hitting
the pause button on the U.S. economy, however, has had its consequences,
including massive job losses, sharp declines in business revenues, and disarray
in the capital markets. This week the conversation shifted to include how to
restart the economy amid a pandemic that may not have yet peaked.
Final Thought
On
a strictly definitional basis, the three-day surge in stock indices this week
signaled a new bull market (when stocks rise 20% after having fallen 20% or
more). But it’s hard for even professional investors to make sense of a market
that enters a bear market and a bull market in the same month. This volatility
certainly speaks to the deep health and economic uncertainties that exist.
It’s
not clear what the rally this past week means for the market going forward.
Absent such clarity, markets are likely to remain volatile in the near term,
requiring investors to be patient with their long-term investments and wait as
calmly as possible for time to answer the big questions overhanging today’s
market.
T I P O
F T H E W E E K
Own a business? Negotiating with vendors may help you save a few hundred dollars in monthly operating costs. It doesn’t hurt to try it; any vendor would prefer a satisfied customer over a search for a new one.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Consumer Confidence.
Wednesday: Automated Data Processing (ADP) Employment Report. Purchasing Managers
Index (PMI): Manufacturing Index. Institute for Supply Management (ISM)
Manufacturing Index.
Thursday: Jobless Claims for Unemployment. Factory Orders.
Friday: Employment Situation Report. Purchasing Managers Index (PMI): Services
Index.
Source: Econoday, March 27, 2020
The
Econoday economic calendar lists upcoming U.S. economic data releases
(including key economic indicators), Federal Reserve policy meetings, and
speaking engagements of Federal Reserve officials. The content is developed
from sources believed to be providing accurate information. The forecasts or
forward-looking statements are based on assumptions and may not materialize.
The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING
EARNINGS
Tuesday: Conagra
Brands (CAG), McCormick & Co. (MKC)
Thursday: Walgreens
Boots (WBA), Chewy (CHWY)
Friday: Constellation
Brands (STZ)
Source:
Zacks, March 27, 2020
Companies
mentioned are for informational purposes only. It should not be considered a
solicitation for the purchase or sale of the securities. Any investment should
be consistent with your objectives, time frame and risk tolerance. The return
and principal value of investments will fluctuate as market conditions change.
When sold, investments may be worth more or less than their original cost.
Companies may reschedule when they report earnings without notice.
Q U O T E O F T H E W E E K
“Drama is life with the dull bits cut out.”
ALFRED
HITCHCOCK
T H E W E E
K L Y R I D D L E
What famed North American landmark is
constantly moving lower and moving backward?
LAST
WEEK’S RIDDLE: A man pocketed it and took it home, intending to eat it. He put
it on a shelf, but three days later it walked away. What was it?
ANSWER:
An egg.
Troy L Thompson, CFP may be reached at 515-432-5421
or troy@thompsonfinancialinc.com
www.thompsonfinancialinc.com
www.thompsonfinancialinc.com
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Troy Thompson, CFP
DBA Thompson Financial and Hanson Asset Strategies
Securities offered through FIRST HEARTLAND CAPITAL, INC.
Member FINRA & SIPC.
Thompson Financial is not affiliated with FIRST HEARTLAND
CAPITAL, INC.
This
material was prepared by MarketingPro, Inc., and does not necessarily represent
the views of the presenting party, nor their affiliates. The information herein
has been derived from sources believed to be accurate. Please note - investing
involves risk, and past performance is no guarantee of future results.
Investments will fluctuate and when redeemed may be worth more or less than
when originally invested. This information should not be construed as
investment, tax or legal advice and may not be relied on for the purpose of avoiding
any Federal tax penalty. This is neither a solicitation nor recommendation to
purchase or sell any investment or insurance product or service, and should not
be relied upon as such. All market indices discussed are unmanaged and are not
illustrative of any particular investment. Indices do not incur management
fees, costs and expenses, and cannot be invested into directly. All economic
and performance data is historical and not indicative of future results. The
Dow Jones Industrial Average is a price-weighted index of 30 actively traded
blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all
over-the-counter common stocks traded on the National Association of Securities
Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500)
is a market-cap weighted index composed of the common stocks of 500 leading
companies in leading industries of the U.S. economy. NYSE Group, Inc.
(NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the
“NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®,
and the Pacific Exchange). NYSE Group is a leading provider of securities
listing, trading and market data products and services. The New York Mercantile
Exchange, Inc. (NYMEX) is the world's largest physical commodity futures
exchange and the preeminent trading forum for energy and precious metals, with
trading conducted through two divisions – the NYMEX Division, home to the
energy, platinum, and palladium markets, and the COMEX Division, on which all
other metals trade. Additional risks are associated with international
investing, such as currency fluctuations, political and economic instability
and differences in accounting standards. This material represents an assessment
of the market environment at a specific point in time and is not intended to be
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Inc. is not affiliated with any person or firm that may be providing this
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CITATIONS:
1 – The Wall
Street Journal, March 27, 2020.
2 – The Wall Street Journal, March 27, 2020.
3 – The Wall Street Journal, March 27, 2020.
4 – CNBC.com, March 23, 2020.
5 – The Wall Street Journal, March 25, 2020.
6 – The Wall Street Journal, March 26, 2020.
2 – The Wall Street Journal, March 27, 2020.
3 – The Wall Street Journal, March 27, 2020.
4 – CNBC.com, March 23, 2020.
5 – The Wall Street Journal, March 25, 2020.
6 – The Wall Street Journal, March 26, 2020.
CHART CITATIONS:
The Wall Street Journal, March
27, 2020.
The Wall Street Journal, March 27, 2020.
Treasury.gov, March 27, 2020.
The Wall Street Journal, March 27, 2020.
Treasury.gov, March 27, 2020.
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