Weekly Market Snapshots
Two practice areas 280 combined years of practice
March 27, 2020

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

Stock market participants were encouraged by the news that lawmakers had reached agreement on a $2 trillion fiscal stimulus package to counter the effects of COVID-19. In comparison, the American Recovery and Reinvestment Act of 2009 was $831 billion. The deal will provide important support for the economy. It will lessen (but not prevent) the weakening in economic activity and should help in the eventual recovery.

Initial claims for unemployment benefits for the week ending March 21 surged to 3.2 million, an unprecedented level (the previous record was 695,000 set in 1982), reflecting job losses in hotels, restaurants, entertainment and recreation, transportation and warehousing, and manufacturing industries. The University of Michigan’s Consumer Sentiment Index fell sharply in March (to 89.1, vs. February’s reading of 101.0), but the report noted a steep decline in the last two weeks.

Next week, March economic data reports begin to arrive. By construction, many of the figures may understate the degree of economic weakness. However, the ISM surveys and payroll figures may surprise to the downside. The nonfarm payroll figures are based on the week that includes the 12th of the month – so will be biased toward the first half of the month.


Indices

  Last Last Week YTD return %
DJIA 22552.17 20087.19 -20.98%
NASDAQ 7797.54 7150.58 -13.10%
S&P 500 2630.07 2409.39 -18.59%
MSCI EAFE 1561.60 1382.01 -23.34%
Russell 2000 1180.32 1058.75 -29.26%

Consumer Money Rates

  Last 1 year ago
Prime Rate 3.25 5.50
Fed Funds 0.00 2.40
30-year mortgage 3.62 4.07

Currencies

  Last 1 year ago
Dollars per British Pound 1.220 1.319
Dollars per Euro 1.103 1.124
Japanese Yen per Dollar 109.58 110.51
Canadian Dollars per Dollar 1.402 1.341
Mexican Peso per Dollar 22.945 19.362

Commodities

  Last 1 year ago
Crude Oil 26.60 59.41
Gold 1660.30 1316.90

Bond Rates

  Last 1 month ago
2-year treasury 0.28 0.98
10-year treasury 0.78 1.21
10-year municipal (TEY) 2.31 1.52

Treasury Yield Curve – 03/27/2020

Chart

As of close of business 03/26/2020


S&P Sector Performance (YTD) – 03/27/2020


Chart

As of close of business 03/26/2020


Economic Calendar

March 31  —  Chicago Business Barometer (March)
 —  CB Consumer Confidence (March)
April 1  —  ADP Payroll Estimate (March)
 —  ISM Manufacturing Index (March)
April 2  —  Challenger Job-Cuts (March)
 —  Jobless Claims (week ending March 28)
 —  Trade Balance (February)
 —  Factory Orders (February)
April 3  —  Employment Report (March)
 —  ISM Non-Manufacturing Index (March)
April 10  —  Good Friday Holiday (markets closed)
 —  Consumer Price Index (March)
April 29  —  FOMC Policy Decision

 

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business March 26, 2020.