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%.1-3
Stock prices appeared to find some firmer footing early in the week, but then continued to trend lower as investors assessed the virus’ economic toll. Manufacturing output fell into contraction territory, while jobless claims soared with a record 6.6 million Americans filing for unemployment benefits.4
The market’s worst day followed President Trump’s announcement that he was extending the social distancing guidelines, adding that conditions were likely to get worse before getting better.
Oil prices soared on Thursday after comments by President Trump that Russia and Saudi Arabia would be cutting oil production and on news that China would be buying oil to add to its strategic reserve. Stock prices were pulled higher by the rebound in oil prices, but turned lower once again, falling under the weight of weak economic data.
Overlooked Troubles In The Oil Patch
The health and economic impact of COVID-19 has dominated the news cycle, and appropriately so. But a less-publicized story is the building stress in America’s energy industry.
Oil prices are depressed, which has left many U.S. producers that have substantial debt obligations in a precarious financial position. Just this week, a publicly traded oil company filed for bankruptcy protection, a potential precursor of more to follow.
Widespread failure in the oil patch may aggravate economic problems through the elimination of high-paying jobs, lower capital expenditures, and capital losses for bondholders.
The Week Ahead: 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.
The Week Ahead: Companies Reporting Earnings
- Wednesday: Delta Airlines (DAL).
- Thursday: Rite-Aid (RAD).
- Friday: First Republic Bank (FRC).
|Market Index||Close Apr 4||Week %||YTD %|
|Treasury||Close Apr 4||Week %||YTD %|
|10 Year Note||0.60%||-0.10||-1.32|
Sources: wsj.com, treasury.gov – 4/3/2020
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. Weekly and year-to-date market index returns are expressed as percentages. 10-year Treasury note yield = projected return on investment, expressed as a percentage, on the U.S. government’s 10-year bond. Weekly and year-to-date 10-year Treasury note yield differences are expressed in basis points.