The Markets (as of market close April 17, 2020)
Last weekend, Russia, Saudi Arabia, and other major oil-producing countries agreed to slash production as oil prices had fallen about 50% from their January peak. Lack of demand, primarily due to COVID-19, has sent oil prices tumbling. The stock market started out slowly on Monday but picked up some steam to pare losses. Of the major benchmark indexes listed here, only the Nasdaq closed the day up. Investors seemed to worry about what the pandemic would do to corporate earnings and shunned stocks for other investments, such as gold, which rose to its highest price in more than seven years.
Stocks rose sharply last Tuesday as each of the benchmark indexes listed here posted gains of between 1.97% (Global Dow) and 3.95% (Nasdaq). Investors had their hopes buoyed by growing optimism that the peak of the pandemic has been reached and a gradual reopening of the economy is not too far away.
Gains from earlier in the week were given back on Wednesday. Investors were hit with the harsh reality of the impact of COVID-19 on businesses as reflected in sagging corporate earnings. Energy companies and banks reported significant declines in earnings. And crude oil continued to fall, plunging below $19.00 per barrel by the end of the day.
Despite some rather sour economic news, Thursday saw investors generally stay the course as the Dow, S&P 500, and Nasdaq recorded gains by the close of trading. But strong economic reports did not drive the market. In fact, the latest report from the Department of Labor revealed more than 5 million new claims for unemployment insurance, bringing the 4-week total to over 22 million. Some large financial institutions reported steep drops in quarterly earnings, home construction plummeted, and retail sales sank.
Stocks closed higher Friday to finish in the black for the second week in a row. Word of a possible treatment for COVID-19, coupled with President Trump’s three-phase process for restarting the economy, gave investors the fortitude to stick with stocks. Each of the benchmark indexes listed here closed the week comfortably ahead, except for the small caps of the Russell 2000. The tech-heavy Nasdaq posted solid gains and is nearing its year-end closing value.
Crude oil prices continued to tumble last week, closing at $18.34 per barrel by late Friday afternoon, down from the prior week’s price of $23.19. The price of gold (COMEX), which had been soaring, receded last week, closing at $1,694.50 by late Friday afternoon, down from the prior week’s price of $1,715.40. The national average retail regular gasoline price was $1.853 per gallon on April 13, 2020, $0.071 lower than the prior week’s price and $0.975 less than a year ago. For More information click here: Winthrop Partners Weekly Update 4-20-2020
Thomas Saunders is the Managing Partner of Winthrop Partners. Prior to founding Winthrop Partners, Tom was Senior Vice President at what is now JP Morgan. His career includes senior and executive roles at Brown Brothers Harriman and First Niagara Bank, a top 25 Bank. Click here to contact Thomas Saunders about your investment and planning requirements.