April 2020

by | Apr 6, 2020 | monthly

In this month’s recap: The CARES Act moves to assist Americans quarantined by COVID-19, providing relief with a $2T stimulus package; markets worldwide react to coronavirus-related volatility.

Monthly Economic Update

Monthly Economic Update | Presented by Sterling Wealth Advisors | April 2020

THE MONTH IN BRIEF

The Coronavirus Aid, Relief, and Economic Security (CARES) Act has been signed into law, bringing relief to millions of Americans, most of whom are expected to be quarantined for at least another month. The White House has asked Americans to continue “socially distancing” during the month of April. Volatility continued in International markets, even as the COVID-19 (novel coronavirus) reached the United States. The Standard and Poor’s 500 (S&P 500) Index was down 12.51% for March.1

DOMESTIC ECONOMIC HEALTH

At the end of March, the CARES Act was signed into law, releasing $2 trillion in relief to millions of Americans and U.S. businesses. This includes $1,200 checks to American taxpayers ($2,400 to married couples) and four months of additional $600 payments to those claiming unemployment.2,3

February’s unemployment rate rose a point to 5.6% (U-6 Unemployment rose to 7%), prior to the St. Louis Fed’s declaration that unemployment could jump to 32.1%, post-coronavirus. The 47 million out-of-work Americans would be the highest number seen since 1948. Michigan consumer sentiment numbers dropped to 89.1 for March, while February’s consumer spending stayed at 0.2%. February retail sales dropped to -0.5% from the previous month’s 0.6%. The ISM Purchasing Managers Index (PMI) dropped to 50.1 for February with new orders sinking to 45.9. The ISM Non-Manufacturing PMI rose to 57.3.4,5,6

GLOBAL ECONOMIC HEALTH

China, where the first widespread outbreak of COVID-19 was reported, has reported a considerable drop in cases (though, it is difficult to verify their numbers). However, the loss of workers due to illness and the changes in demand worldwide may have a long-term effect on China’s gross domestic product (GDP). The overall drop of 3.7% in GDP, crossed with an upswing in China’s manufacturing PMI to a score of 52, indicate a country that has come back to work.7,8,9

Europe and the United Kingdom have also been hit heavily by COVID-19, with Italy and Spain seeing a large number of cases. Aggressive actions to subsidize employment in Europe are projected to stem unemployment claims to some degree. Meanwhile, inflation in the 19-country euro area has dropped to 0.7%.10,11

WORLD MARKETS

There were several markets sinking in March, including the U.K.’s FTSE 100 (-13.81%), the German Dax (-16.44%), the French CAC 40 (-17.21%), Japan’s Nikkei 225 (-10.53%), Australia’s All-Ordinaries (-21.51), Brazil’s Bovespa (-29.90), Mexico’s Bolsa (-16.38%), Hong Kong’s Hang Seng (-9.67), China’s Shanghai Composite (-4.51), Malaysia’s KLCI (-8.89), South Korea’s Kospi Composite (-11.69), and Russia’s RTS (-21.95).12,13

The MSCI EAFE Index (which measures performance across developed stock markets outside North America) took a 14.77% fall.14

COMMODITIES MARKETS

Energy commodities fell in March, including light crude (-55.17%), heating oil (-33.10%), natural gas (-3.12%), and unleaded gas (-59.45%). The drop in oil prices was attributed to Saudi Arabia and Russia, who show no signs of compromising in their standoff over oil supply.15

Meanwhile, other commodities stepped into negative territory in March, such as corn (-6.75%), cocoa (-18.88%), cotton (-16.65%), and sugar (-25.80%). The exceptions for March were soybeans (+0.11%), wheat (+7.38%), and coffee (+7.41%).15

Metals also had a difficult month, with March numbers diminishing for gold (-0.74%), silver (-14.75%), platinum (-17.13%), and copper (-12.96%). The U.S. Dollar Index closed at 98.95, up 1.62%.15,16

REAL ESTATE

Freddy Mac’s Primary Mortgage Market Survey for March 26 revealed the mean interest rate on a 30-year home loan as 3.5%, up 0.05% since the end of February. The 15-year home loan sank 0.03% to 2.92%.17

Existing home sales rose to 6.5% for February, with 5.77 million homes available. New home sales fell back 4.4% for February, with 765,000 houses on the market. Housing starts also pulled back 1.5%. Building permits stepped back 5.5%.4

TIP OF THE MONTH

Anyone who starts a business needs an operational strategy. A good one includes metrics, a day-to-day plan detailing who will do what, and an assessment of external and internal risks.

LOOKING BACK, LOOKING FORWARD

March saw the end of the worst quarter for stocks in U.S. history. The Dow Jones Industrial Average (DJIA) closed at 21,917.16. The Standard and Poor’s 500 (S&P 500) ended the month at 2,584.59, while the NASDAQ Composite Index closed at 7,700.10.18

MARKET INDEX Y-T-D CHANGE 1-MO CHANGE 2019
DJIA -23.20 -13.72 +22.34
NASDAQ -14.18 -10.12 +35.23
S&P 500 -20.00 -12.51 +28.88
BOND YIELD 3/31 RATE 1 MO AGO 1 YR AGO
10-YR TREASURY 0.70 1.13 2.41

Sources: Bloomberg.com, Barchart.com, treasury.gov – 00/00/00

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year Treasury real yield = projected return on investment, expressed as a percentage, on the U.S. government’s 10-year bond.

QUOTE OF THE MONTH

“Adversity is the first path to truth.”

Lord BYRON

UPCOMING RELEASES

Here are some of the economic news items for investors to consider in April: the March Institute for Supply Management Non-Manufacturing Index (4/3), March’s Consumer Price Index (4/10), March’s Producer Price Index (4/9), the initial April Consumer Sentiment Index from the University of Michigan (4/9), March retail sales (4/15), March housing construction activity (4/16), March existing home sales (4/21), March new home sales (4/23), March durable goods orders (4/24), March personal spending and income and the final April University of Michigan Consumer Sentiment Index (4/24), the estimate of first-quarter gross domestic product from the Bureau of Economic Analysis (4/29), and then the Conference Board’s March Consumer Confidence Index and the latest S&P/Case-Shiller Home Price Index (4/28). NOTE: Some releases may be delayed or rescheduled in the wake of the COVID-19 epidemic.

THE MONTHLY RIDDLE

While most English words can be pluralized by adding the letter S on the end, there is one word that can be pluralized just by the addition of the letter C. What is it?

LAST MONTH’S RIDDLE: What gets broken without being held?

ANSWER: A promise.

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Sterling Wealth Advisors and Cambridge are not affiliated.

To learn more about Sterling Wealth Advisors, visit us on the web at www.sterlingwealthadvisorstx.com

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain’s principal stock exchange. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The DAX 30 is a Blue-Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The Bovespa Index is a gross total return index weighted by traded volume & is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The Nifty 50 (NTFE 50) is a well-diversified 50-stock index accounting for 13 sectors of the Indian economy. It is used for a variety of purposes such as benchmarking fund portfolios, index-based derivatives and index funds. The BSE SENSEX (Bombay Stock Exchange Sensitive Index), also-called the BSE 30 (BOMBAY STOCK EXCHANGE) or simply the SENSEX, is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE). Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The Korea Composite Stock Price Index or KOSPI is the major stock market index of South Korea, representing all common stocks traded on the Korea Exchange. The FTSE TWSE Taiwan 50 Index consists of the largest 50 companies by full market value and is also the first narrow-based index published in Taiwan. The MICEX 10 Index is an unweighted price index that tracks the ten most liquid Russian stocks listed on MICEX-RTS in Moscow. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The All Ordinaries (XAO) is considered a total market barometer for the Australian stock market and contains the 500 largest ASX-listed companies by way of market capitalization. The US Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
CITATIONS:

1 – CNN.com, March 31, 2020.

2 – CNBC.com, March 30, 2020.

3 – Forbes.com, March 29, 2020.

4 – Investing.com, March 31, 2020.

5 – USA Today, March 31, 2020.

6 – MarketWatch, March 31, 2020.

7 – CNBC.com, April 1, 2020.

8 – Nikkei Asian Review, March 31, 2020.

9 – Forbes.com, March 31, 2020.

10 – CNBC.com, March 30, 2020.

11 – Eurostat, March 31, 2020.

12 – New York Times, March 31, 2020.

13 – Barchart.com, March 31, 2020.

14 – MarketWatch.com, March 31, 2020.

15 – CNN.com, March 31, 2020.

16 – MarketWatch.com, March 31, 2020.

17 – Freddie Mac, March 31, 2020.

18 – Bloomberg.com, March 31, 2020.