Market Commentary: First Quarter
Stay Home, Stay Healthy!
Global markets came under significant pressure as COVID-19 spread across the globe. U.S. Large companies represented by the S&P 500 Index slid -19.6%. Small companies represented by the Russell 2000 declined -30.6% and international stocks represented by the iShares MSCI EAFE Index decreased -22.8%. The Federal Reserve cut the Federal Funds Rate to 0%, and they initiated quantitative easing by purchasing debt instruments such as mortgage backed securities, treasuries, and municipal bonds to provide stability in the bond markets. The bright spot was U.S. Treasuries – considered the safest investment money can buy as investors fled to safety. The Barclays US Gov/Credit 1-5 Year Index was up 2.17% for the quarter.
Just before the end of the quarter, the government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, of which encompasses relief to small business owners, changes for retirement plan participants (distributions and loans), IRA distributions and required minimum distributions, student debt relief, expansion of unemployment benefits, forbearance on federally-backed mortgage loans, 2019 federal income tax deadline postponement to July 15, 2020, and direct cash rebates for qualifying individuals. Our advisors have digested most of this information and should be able to help if you have questions on any of these items.
The following is a quote from our 4th quarter 2019 commentary, “There are a lot of events that happen throughout the year that impact the weather, politics, sports, financial markets, communities, and many other things. The amazing thing is that most of the information is instantly available at our fingertips for us to evaluate, and global financial markets are a collection of every person or entity that is acting and responding to the ever-changing information.”
How true. As we have seen in the last two months since the virus became a real threat to our health system, economy, community, and our general way of life, people and the markets (and even our government) have acted fast to the ever-changing information. We will all get through this crisis. The global markets will recover, and in a few years we will think back…remember the Coronavirus?