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March 28th, 2020 Commentary Thumbnail

March 28th, 2020 Commentary

As mentioned previously, we'll continue to send out a weekly email with updates from us, and articles from our trusted research partners.  This week felt as long as a year with all that occurred.  

Volatility reigned, as the week started out and ended with negative days on the averages, but we saw some the largest one day gains in the history of the stock market, as the S&P 500 rose 17.6% over a 3-day period from Tuesday through Thursday. The Dow rose 12.84% in total last week, in large part due to the performance of Boeing (BA) which rose 70.50% during the week.  While Boeing’s performance sounds impressive, it is still down over 50% YTD. Here is the 2020 YTD (versus 2019 full-year) performance of the major U.S. equity indices (as of the close on 3/27/20):                                                   

2020 YTD2019 Final
S&P 500-21.25%+28.90%
Dow Jones Industrial Average-24.18%+22.30%
Nasdaq Composite-16.38%+35.20%
Russell 2000-29.26%+23.70%

The best performing sectors YTD are Utilities, Information Technology and Consumer Staples (all with returns of -13.78 or worse) while Energy, Financial and Industrials have felt the brunt of the downturn.  Bond markets were not immune to the volatility, as corporate and municipal bonds fell due to concerns related to the impact of COVID-19.

The major focus of the week was the $2.2 Trillion dollar economic stimulus package which made its way through the Senate, both Congress and the president signed on Friday.  The 880 page bill is meant to cushion the economic blow from the impact of the coronavirus.  Major features of the bill include:

  • direct payments of $1,200 to individuals ($2,400 to couples), plus an additional $500 per child, for individuals earning less than $75,000 ($150,000 for couples);

  • increased and extended unemployment benefits;

  • more than $375 billion in grants and loans for small businesses;

  • up to $500 billion in aid for large businesses, including $25 billion set aside for airlines;

 Another provision that could impact some of you is the waiver of Required Minimum Distributions for IRAs and 401(k)s for 2020.  Additionally, the Act waives early-withdrawal penalties on coronavirus-related distributions from retirement accounts up to $100,000. It would allow tax payments on distributions to be spread out over three years and would allow individuals to return distributions to the retirement account over three years, with such redeposits not subject to annual contribution limits.

 We continue to expect volatility in the markets with the uncertainty of the length of the lock-downs, business disruptions and economic impact of the coronavirus.  We'll continue to keep you up to date as we move forward.  

 Pro Tip: If you are planning  to travel this summer, you may want to check out Southwest Airlines flights :)