Market Update – March 30, 2020

Major stock indices recovered some ground last week, as investors expressed hope that the latest recovery legislation will soften the effects of the coronavirus recession. The Dow Jones Industrial Average gained 12.8%, while the S&P 500 Index advanced 10.3%.

While this good news was welcome after the precipitous drop of the previous week, stock markets are not yet clear of danger. So much about the virus and how best to counteract it remains uncertain. As such, it’s likely that we will continue to experience significant volatility. As expected, the first bits of coronavirus economic data were sobering; the record number of first-time unemployment claims topped 3.3 million, according to the U.S. Department of Labor.

After some fits and starts earlier in the week, the U.S. Congress passed $2 trillion coronavirus relief legislation on Friday, and President Trump signed it into law. Some key provisions of the stimulus bill include:

  • Direct payments to Americans, subject to income limits
  • Extended unemployment insurance provisions, including “gig economy” workers
  • More than $350B in small business loans, which may be forgiven if used on payroll, rent or utilities
  • More than $500B in loans and loan guarantees for larger businesses, states and municipalities
  • Allowing businesses to defer payroll taxes for the rest of the year
  • Money for hospitals and veterans’ care
  • Suspension of required minimum distributions (RMDs) for 2020

Markets had anticipated the size and scope of the legislation, and some of the stock market recovery last week came from the expectation that the stimulus bill would indeed become law.  Expect market volatility to continue in the weeks ahead as investors balance the perceived efficacy of this latest round of fiscal countermeasures against the mounting virus case and mortality statistics.

Fixed income investments regained a measure of stability, a result of the Federal Reserve injecting liquidity into markets that had seized up as many investors liquidated to raise cash during the sell-off. Trading in high-grade investments such as Treasury bills, money market funds, and municipal bonds began to normalize as the week progressed.

As markets continue to fluctuate, please contact us with any questions during this trying time. We are here for you and are doing everything we can to care for your financial needs both in the short-term and as we navigate the months ahead. Again, we will be here to support you in any way possible.

A note about video updates from Planning Alternatives: We’re hearing from clients on a daily basis who feel unsettled by this unprecedented global crisis. We know you’re being flooded with an avalanche of news each day, so we’d like to help you make sense of the changing economic environment in real-time. Nathan Mersereau will be posting short videos that will provide timely insights and advice. The goal is to cut through some of the noise and share with you the most pertinent and helpful information. We will post links to Nathan’s video updates across all of our social media channels. You can follow us on YouTube, LinkedIn, Facebook and Twitter.