The world dramatically changed this quarter. After an incredible year for the stock market, strong economic growth, and record low unemployment, the coronavirus struck. While social distancing measures and stay-at-home orders save lives, they damage economies. Businesses, especially those in leisure, hospitality, retail, and transportation, have come to an abrupt stop. Initial claims for unemployment spiked to over 3.2 million at the end of March, which is the highest ever recorded. Uncertainty over future corporate earnings caused sharp volatility in the stock market. The Russia-Saudi Arabia oil war, which sent oil prices plummeting, further compounded the volatility. The end result was the most rapid decline into a bear market in history and the worst quarter for stocks since the 2008 financial crisis.
The U.S. government has taken massive measures to limit the economic damage. The Federal Reserve lowered rates to nearly zero, began unlimited quantitative easing, and pledged to backstop a variety of markets. Congress passed a $2.2 trillion stimulus bill, which includes provisions for direct payment checks to individuals and expanded unemployment benefits. It also provides loans and grants to businesses, help for hospitals and public health, state and local governments, education, and airlines.
While this pandemic and its impact leave many of us fearful and concerned, we will get through this. Much time, money and intellectual resources are going into developing treatments and a vaccine. Volatility in the stock market will continue, but this presents an opportunity to invest in solid companies. History shows that the market will recover. Times like this require patience and a focus on long-term plans. We remain vigilant and committed to helping our clients achieve their long-term goals. As always, we are here for you, please reach out to us at any time.
|Index||1st Quarter 2020||Year-to-date|
|Dow Jones 30||-22.73%||-22.73%|
|Bloomberg Barclays U.S. Agg Bond||3.15%||3.15%|
|MSCI EAFE Index||-22.72%||-22.72%|
|MSCI EM Index||-23.57%||-23.57%|
Sources: Y Charts
Figures as of March 31, 2020. Past performance cannot guarantee future results.
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