Virus Anxiety, Gloomy Data Pressure Stocks……

The U.S. equity markets ended another bumpy week on a down note, posting the third weekly decline in four, as the heightened uncertainty surrounding the depth and duration of the COVID-19’s economic and social impact continued to sap sentiment. The uneasiness came amid news that global cases breached the 1 million mark and the U.S. looks to be heading into rough waters. As well, a host of March economic data painted a downbeat picture, with non-farm payrolls in the U.S. falling by a much larger-than-expected amount and likely understated after the severe spike in jobless claims that occurred at the end of March that approached the 10 million mark. Moreover, ISM’s services sector report, tilted more toward larger companies, posted a decisive drop, but showed growth remained in expansion territory, while Markit’s broader survey of companies varying in size registered the largest contraction on record. Treasury yields were lower as bond prices moved to the upside, the U.S. dollar gained ground, gold rose, and crude oil prices extended yesterday’s surge on optimism of a potential thawing of the price war between Russia and Saudi Arabia. Europe finished out the week mostly lower and Asia was mixed, as the global markets absorbed a host of services sector reports that showed broad-based contractions.

The Dow Jones Industrial Average declined 361 points (1.7%) to 21,053, the S&P 500 Index shed 38 points (1.5%) to 2,489 and the Nasdaq Composite dropped 114 points (1.5%) to 7,373. In moderately heavy volume, 1.4 billion shares were traded on the NYSE and 3.3 billion shares changed hands on the NASDAQ. WTI crude oil jumped $3.02 to $28.34 per barrel and wholesale gasoline was up $0.03 at $0.69 per gallon. Elsewhere, the Bloomberg gold spot price was $7.33 higher to $1,621.32 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.4% to 100.54. Markets were lower for the week, as the DJIA lost 2.7%, the S&P 500 fell 2.1% and the Nasdaq Composite declined 1.7%.

However, the markets remain at the mercy of the intensifying COVID-19 (coronavirus) pandemic, with global cases topping the 1 million mark and the U.S. currently the epicenter of the outbreak and likely heading through darker times before seeing some light at the end of the crisis tunnel. Uncertainty regarding the depth and duration of the extreme economic and social disruption continues to keep the markets skittish, with focus on whether the equity markets will test the March 23rd lows.

U.S. stocks registered a third weekly drop in four, with volatility and uncertainty remaining at extreme levels, courtesy of the intensifying COVID-19 pandemic disruption. The range of movement in the equity markets settled down a bit relative to the past three weeks that saw swings in both directions north of 10.0%. The markets found some calming effects of the massive amount of monetary and fiscal policy ammunition discharged aimed at stabilizing the critical credit markets, combating a surge in unemployment for small-and-medium sized businesses, keeping severely impacted industries from collapsing, and supporting the stressed healthcare system. Moreover, news of potential breakthroughs from the biotechnology sector offered some glimmers of hope that virus mitigation efforts may be expedited through possibly faster detection, containment and treatment options.

Treasuries were mostly higher as the markets grappled with the festering COVID-19 pandemic uncertainty and the coinciding spike in unemployment, along with the massive amounts of fiscal and monetary policy responses. The yield on the 2-year note was flat at 0.23%, while the yield on the 10-year note declined 2 basis points (bps) to 0.61% and the 30-year bond rate fell 3 bps to 1.23%.

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