In this weeks recap: Continued COVID-19-related volatility in the markets as oil and energy prices sink in reaction.
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.
T I P O F T H E W E E K
Money is never an end in itself, merely a tool that can help you reach your goals. Linking your financial goals with your life goals may lead to improved control of your business and personal finances.
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.
Source: Econoday, April 3, 2020
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Wednesday: Delta Airlines (DAL).
Thursday: Rite-Aid (RAD).
Friday: First Republic Bank (FRC).
Source: Zacks, April 3, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Q U O T E O F T H E W E E K
“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.”
T H E W E E K L Y R I D D L E
Can you name six or more starting with the letter S things that you can wear on your feet?
LAST WEEK’S RIDDLE: What famed North American landmark is constantly moving lower and moving backward?
ANSWER: Niagara Falls (the rim is worn down about 2.5' each year because of the millions of gallons of water that rush over it every minute).
Heritage Wealth Management Email Disclosure
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
1 – The Wall Street Journal, April 3, 2020.
2 – The Wall Street Journal, April 3, 2020.
3 – The Wall Street Journal, April 3, 2020.
4 – The Wall Street Journal, April 2, 2020.
The Wall Street Journal, April 3, 2020.
The Wall Street Journal, April 3, 2020.
Treasury.gov, April 3, 2020.