The major markets experienced massive losses last week as the S&P 500 endured the worst weekly return since October 2008, during the financial crisis. The Dow Jones saw even greater losses with the index down 17.3% in one week. Year to date, all five major markets are down well over 20%, with the MSCI World Index and Dow Jones Industrial Average down 30%.
This pullback has been remarkable in how quickly it has happened. After hitting new all-time highs on February 19th, the S&P 500 has dropped over 30% in just as many days. This marks the fastest 30% decline in the history of the S&P 500. But as brutal as last week was for investors, the S&P 500 sits at the same level that it did in January 2017 and not far off the level last seen in January of 2019.
Sadly, there were few places to hide from losses last week. Even bonds were impacted. The Bloomberg Barclays US Aggregate Bond Index also saw a drop of 2.29% returning the index to flat on the year. Even AAA rated U.S. Corporates were hit as the Bank of America U.S. Corporates AAA Index fell 9.23% as the Effective Yield shot up from the March 9th low of 1.79% to 3.36% on Friday.
Precious metals were also pounded. Silver’s losses rivaled that seen in the S&P 500 while Gold only gave back 2% for the week. Industrial Metals also were down as the demand for raw manufacturing materials has caused the indices to correspond to the performance seen in the overall domestic equity markets.
Investors will need to brace themselves for a slew of negative reports over the coming weeks and months. These releases will likely be remarkable due to how far they will be outside of historical norms. Last week, the Department of Labor reported the beginnings of the surge that we will see in the weekly jobless claims. The seasonally adjusted weekly reading of 281,000 is 70,000 higher than last week and will likely be eclipsed by this week’s reading. In fact, Reuter’s reported that that number could reach a record 1.5 million this week. This could exceed the current weekly record of 695,000 from back in 1982 by more than double if it occurs.
Politicians in Washington are currently negotiating bills to offer financial remuneration to offset the widespread layoffs that businesses and whole industries have had to deal with. Meanwhile, the number of confirmed cases of the Novel Coronavirus will continue to climb exponentially in North America as more and more testing is rolled out.
We would advise that you stay home as much as possible at this time for your safety as well as the safety of other until authorities feel that the situation is under control in the next couple weeks.
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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.
https://us.spindices.com/indices/equity/sp-500
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.
https://us.spindices.com/indices/equity/dow-jones-industrial-average
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
https://indexes.nasdaqomx.com/Index/Overview/COMP
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.
https://us.spindices.com/indices
Companies in the S&P 500 Sector Indices are classified based on the Global Industry Classification Standard (GICS®).
https://us.spindices.com/indices