Volatility has become the new normal as the markets experienced wild swings day after day in virtually every asset class. The action was so severe, last week held two 15-miunute trading halts at Monday’s and Thursday’s open.
There are three levels of these breakers; Level one takes place when there is a drop greater than 7%. Level 2 kicks in at a 13% drop, and Level 3 at 20%. If a level 1 or level 2 circuit breaker occurs prior to 3:25 pm, then the trading halts for 15 minutes. If it occurs at 3:25 pm or later, then trading is allowed to continue. The Level 3 breaker halts trading for the remainder of the trading day.
Last week opened with losses due to geopolitical turmoil in oil. Saudi Arabia and Russia began an oil supply war as the OPEC countries could not agree on supply cuts . After much debate, Saudi Arabia shocked other OPEC members by flooding the market with oil in the face of declining demand due to the global coronavirus pandemic. It has become clear that Saudi Arabia intends to make this environment even more painful for other oil-producing countries until others are willing to agree to cuts. By the end of the week, the MSCI Crude Oil Index had fallen 23% and sits with a loss of 48% year to date.
In the midst of last week’s volatility, the S&P 500 experienced the largest single day decline since Black Monday on October 19th, 1987. In fact, Thursday’s decline was the largest total point loss in the history of the S&P 500 and second only in percentage terms to the loss of Black Monday which had a loss of 20.47%.
This massive decline was followed up with an incredible gain of 9.29% on Friday. This marked the largest gain since October 2008 and surpassed the 9.1% gain that followed Black Monday back on October 21, 1987.
Meanwhile, the Coronavirus situation continues to worsen around the globe. Last week marked the first time that the total confirmed cases outside of China exceeded the number within China. As of Monday the 16th, the total confirmed has reached over 182,000 worldwide and the total deaths have exceeded 7100.
Johns Hopkins University has created a powerful informational tool to display the latest updates to the global number from various sources. However, we urge you to be cautious as a number of people have inadvertently installed malware viruses onto their computers by going to the wrong website to view this dashboard. To find the official Johns Hopkins COVID-19 Dashboard, please ensure that you only go to the Johns Hopkins website at jhu.edu. The direct link to the Tracking Map can be found by clicking on the top of the main page and then scrolling down to the COVID-19 tracking map link on the righthand side.
Egan, Matt. “Oil Crashes by Most since 1991 as Saudi Arabia Launches Price War.” CNN, Cable News Network, 9 Mar. 2020, www.cnn.com/2020/03/08/investing/oil-prices-crash-opec-russia-saudi-arabia/index.html.
The S&P 500® Index is a capitalization index of 500 stock-designed to measure performance of the broad domestic economy through changes in the aggregate market value of stock representing all major industries.
The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.
The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes over 2,500 companies, more than most other stock market indexes. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indexes
The MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and MSCI World benchmark does not offer exposure to emerging markets.
The MSCI Emerging Markets (EM) Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets countries of the Americas, Europe, the Middle East, Africa and Asia. As of December 2017 it had more than 830 constituents and covered approximately 85% of the free float-adjusted market capitalization in each country.
The S&P GSCI Crude Oil index provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.
Companies in the S&P 500 Sector Indices are classified based on the Global Industry Classification Standard (GICS®).