The Federal Reserve crossed traditional boundaries and opened the doors on Thursday for another round of emergency measure funding. The Fed said it will invest up to $2.3 trillion in loans to aid small and mid-sized business and state and local governments as well as fund the purchases of some types of high-yield bonds, collateralized loan obligations and commercial mortgage-backed securities.
Just as the Fed highlighted its plans, the Labor Department announced 6.6 million Americans filed for unemployment benefits in the week ended April 4, bringing the number to 16.8 million over the past 3 weeks. Unemployment rates have skyrocketed as millions of Americans process the effects of an economy experiencing a sudden stoppage.
The S&P 500 closed up 12.1% for the week and has had a 27.3% recovery from its low point on March 23. The Dow Jones Industrial Average gained 12.7% and has gained 30.2% since its low point on March 23. Market volatility continues to be the norm and in the short term, stocks are unpredictable. Our investment team continues to look for opportunities within this time period and are currently reviewing portfolio rebalancing for clients, selling assets at a gain and reinvesting into assets at a low point, all within a targeted risk allocation. Our base case remains to expect recovery to take place in the economy. The two factors we believe will likely determine the speed of recovery are how quickly the virus is contained and how quickly businesses can regain traction.
As we look forward to post-virus living, outcomes generated from this crisis will produce a change in the way people operate and view the world. A few possible implications could include:
- Restrictions on social gatherings
- Extended travel restrictions
- A need for companies to outline their health and safety standards for their product or service
- Optimized work from home arrangements
- Industry changes leading to pockets of global unemployment
- Specialized home delivery solutions
There are many implications yet to be realized but as you have time to consider what this crisis means to you and your family, please let us know if we can answer any questions or concerns you may have about your financial plan. Our commitment remains to be here for you every step of the way. In the meantime, we encourage you to enjoy this holiday season and celebrate with loved ones.