Monthly Market Insights | April 2020

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

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 ACTIONOn 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