Weekly Market Update | April 6, 2020
Congress Approves Stimulus
The Week on Wall Street
The Week on Wall Street
Modest declines in stock prices this week masked the volatile inter- and intraday price swings as investors digested poor economic data and a warning from the president that the worst days of the COVID-19 pandemic may still lie ahead. The Dow Jones Industrial Average slipped 2.70%, while the Standard & Poor’s 500 dropped 2.08%. The Nasdaq Composite Index declined 1.72%. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 2.76%.
The Quarter in Brief
The spread of COVID-19 sent stocks tumbling in the first quarter as health and economic costs of the pandemic began to mount. Stocks remained under pressure, despite the Federal Reserve’s lowering of short-term interest rates and the government’s stimulus efforts through the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act. The DJIA sank 23.2% and the S&P 500 dropped 20% on the quarter. The COVID-19-related volatility in the market has left all but a handful of sectors in a prolonged period of uncertainty. With millions of Americans staying at home in an effort to “flatten the curve” of COVID-19’s impact on people, businesses are coping with closing for the duration, altering practices, or facing staffing issues.
The oil market dominated the commodities headlines during the first quarter. The failure of Russia to join Saudi Arabia in supporting lower oil production targets left Saudi Arabia fuming and responding with an announcement of its intention to raise oil output. Oil prices plummeted on the news, contributing to the stock market’s woes. While lower oil prices represent a boon to consumers in the form of lower gasoline prices and a relief to companies with high energy consumption (e.g., airlines, chemical), they also pose a risk to the American energy industry.
Should low oil prices persist, it may lead to lower capital expenditures, labor force reductions, and troubles in the credit markets as less-capitalized companies struggle to meet their debt obligations. As the quarter came to a close, there was some speculation that President Trump would take a larger role in working with Russia and Saudi Arabia on production targets.
It is difficult to see, in the middle of the COVID-19 epidemic, exactly what the full impact will be. Suffice it to say, the cost in human terms has been staggering so far and seems certain to affect at least part of the coming quarter. As people and businesses adapt to extended periods of quarantine, the only thing that seems clear is that no aspect of American life will be unchanged. CARES Act stimulus checks are on the way for millions of Americans. The Federal Reserve has lowered interest rates. Further measures are being considered at the state and federal levels. The only two things that seem truly certain are that action is being taken and that we’ll all breathe a sigh of relief once this crisis subsides.
Key Economic Data
Tuesday: JOLTS (Job Openings and Labor Turnover) Survey.
Wednesday: FOMC (Federal Open Market Committee) Minutes.
Thursday: Jobless Claims for Unemployment.
Friday: Consumer Price Index.
Source: MarketWatch Calendar
Companies Reporting Earnings
Wednesday: Delta Airlines (DAL)
Thursday: Rite-Aid (RAD)
Friday: First Republic Bank (FRC)
Sources: The Wall Street Journal, April 3, 2020; Treasury.gov, April 3, 2020
The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. Weekly performance for the Dow Jones Industrial Average, Standard & Poor’s 500 index, and NASDAQ Composite is measured from the close of trading Friday, March 27 to the Friday April 3 close. Weekly performance for the MSCI-EAFE is measured from the Friday March 27 open to the Thursday April 2 close. U.S. Treasury Notes are guaranteed by federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it might be worth more or less than the original price paid. Weekly and year-to-date 10-year Treasury note yields are expressed in basis points. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Staying Close While Social Distancing
Over the past few weeks, the world has entered into uncharted territory. Many of us have rapidly transitioned from seeing and interacting with dozens of people on a regular basis to much fewer each day. While some people are more introverted than others, even the greatest solitude seekers have social needs. So, how can we stay connected while remaining far apart?
- Prioritize initiating interactions with your friends and family who are far away. Send an email, text, or direct message. Call them, and maybe even send a letter via snail mail. If you have the technology available, have a virtual, face-to-face conversation. There are many free apps available for video conferencing.
- Spend quality time with those in quarantine with you. Whether they’re your parents, children, siblings, other relatives, or friends, find activities, like games and family meals, to nurture the bonds you have with the people sharing your home.
- Seek out group activities online. Stream a class or lecture series. Join an online forum or message board. Attend an online watch party for a movie or show. Take a virtual museum tour. You might be surprised by what’s available.
Being distant doesn’t have to mean being isolated. There are ways for us to be close to one another, even when we’re not.
Tip adapted from Success.com
Mozzarella Party Skewers
- 24 red and yellow cherry tomatoes
- 24 bite-sized fresh mozzarella balls
- 1 jar of green olives (24 olives, stuffed with pimentos or garlic, as preferred)
- Thread 6-inch skewers with tomatoes, olives, and mozzarella onto the skewers.
- Create a domed shape with loosely crumpled aluminum foil. Poke spears in to arrange.
Recipe adapted from DinnerAtTheZoo.com
A Simple Fix for Skying Your Tee Shot
A tee shot that resembles an infield pop-up on a baseball diamond gets a hole off to a frustrating start. A hacker’s mistake? Not necessarily. Even a golfer who has played thousands of rounds can hit one. The fix is usually simple.
When we tee up a ball, we tend to want to err on the high side. That said, we also want the bottom of the clubface to come into contact with the ball when we come through the impact area. If the top half of the clubface hits the ball, then a pop-up off the tee will occur. So, we must lower the tee so that the ball doesn’t sit above the top line of the clubface, whether we have a driver, hybrid, or iron in hand.
Tip adapted from Golf Distillery
Tips for Young or First-Time Workers: Don’t Forget About Taxes
If your child or grandchild has recently secured employment, pass along these helpful tips from the IRS:
- Don’t be surprised when your paycheck is smaller than you expect. Employers withhold taxes and pay them directly to the IRS.
- Keep in mind that all tip income is taxable, and you must report tip income over $20 monthly to your employer.
- Even if you don’t earn enough from your first job to owe income taxes, your employer must withhold Medicare and Social Security taxes from your paychecks.
- Any money you earn from working for others is taxable. If you mow lawns, babysit, or earn money outside a regular job, you may be considered self-employed by the IRS.
- Speak to your employer about whether they will be reporting your wages to the IRS. If you have questions, ask your parents or grandparents to put you in touch with a tax expert.
For more information about tax rules for first-time jobholders, visit IRS.gov or consult a qualified tax advisor.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov
If You’re Able to Go Outside, Leave Only Footprints
Most of the country is restricted from going outside right now, but if you can, find a non-crowded hiking trail to get some sunshine and exercise. Here are a few tips to make your next hike a memorable, safe, and environmentally friendly one.
Pack out what you brought in. This should go without saying, but make sure that whatever food, beverages, and hiking equipment you bring along go back home with you. The local wildlife might mistake even small amounts of garbage as food. Even an orange peel, if not native to the area, can cause issues with the habitat.
Stay on the trail. Many hiking trails and preserves are home to some of the most beautiful sights nature has to offer – and are also home to some of the most sensitive habitats. Leaving the trail can damage the fragile ecosystems that surround you. This is also a safety measure because if something happens to you, the park rangers won’t know where to look.
If you’d rather not chance walking on a trail, you can still get out and take a walk around the block. There’s so much beauty to be found around you.
Tip adapted from Green America
Financial planning and investment advisory services offered through Cleveland Wealth, LLC, a Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified wealth advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.