COVID-19 Uncertainty continues to weigh on Markets…..
U.S. equities finished mixed to begin the week after an extended Easter holiday weekend, as the markets continued to wrestle with whether the COVID-19 pandemic’s curve is flattening in the world’s largest economy, and as to the depth and duration of the virus’ global economic and social disruption. Crude oil prices finished slightly lower, surprisingly showing little reaction to the weekend’s highly-anticipated production cut announcement of a record 9.7 million barrels per day from OPEC+, and as Russia and Saudi Arabia agreed to end their price war. Treasury yields were higher, as bond prices dipped, with the economic calendar void of any releases today. News on the equity front was again light, but earnings season is around the corner, with results from the key financial sector set to get things moving tomorrow. The U.S. dollar ticked lower, and gold gained ground. Most international markets remained closed following the Easter holiday, but those that were open for business finished lower.
The Dow Jones Industrial Average lost 329 points (1.4%) to 23,391, the S&P 500 Index decreased 28 points (1.0%) to 2,762, while the Nasdaq Composite advanced 39 points (0.5%) to 8,192. In moderately heavy volume, 1.2 billion shares were traded on the NYSE and 3.1 billion shares changed hands on the NASDAQ. WTI crude oil declined $0.35 to $22.41 per barrel, while wholesale gasoline gained $0.02 to $0.70 per gallon. Elsewhere, the Bloomberg gold spot price was $22.46 higher to $1,719.11 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—ticked 0.1% lower to 99.41.
After spending most of the day lower, the U.S. equity markets finished mixed following last week’s sharp rally and the long Easter holiday weekend, with attention paid to data pointing to a potential slowing of the spreading of the COVID-19 (coronavirus). Optimism of the potential of the coronavirus curve flattening has fueled a noticeable bounce off of the March 23rd lows for stocks, though uncertainty remains elevated about the timing of the reopening of the world’s largest economy as mitigation efforts surrounding the testing, tracing, containment and treatment of COVID-19 remains tentative. The healthcare system continues to be stressed as the nation grapples with boosting the supply of personal protective equipment (PPE), which has been a key hurdle in the war on the coronavirus pandemic.
Meanwhile, the markets digested the agreement after lengthy discussions over the weekend between OPEC and its allies, known as OPEC+, of a record global oil production cut of 9.7 million barrels per day (bpd) for May and June, which included a deal to end the price war between Saudi Arabia and Russia. However, crude oil prices showed a muted reaction as the expectation had called for a range of 10-15 million bpd and as the overhang of the severe demand shock remains. Also, the markets awaited this week’s unofficial commencement of Q1 earnings season beginning tomorrow, as key results from the banking sector will pour in. The results are likely to be taken with a grain of salt but commentary and guidance from management are poised to carry the most weight as uncertainty remains hefty regarding the depth and duration of the unprecedented global economic shutdown. Finally, the trillions of dollars being deployed from monetary and fiscal policy standpoints has been cheered and has helped combat the monumental economic disruption and the restoration of financial market functioning. However, early bumps in the road regarding the implementation of the government’s small business lending program, known as the Paycheck Protection Program (PPP) appears to be exacerbating the prevalent uncertainty amid the backdrop of the recent spike of nearly 17 million in weekly initial jobless claims seen over the past three weeks.
Treasuries were lower, as the yield on the 2-year note was 2 basis points (bps) higher at 0.25%, while the yields on the 10-year note and the 30-year bond gained 4 bps to 0.76% and 1.39%, respectively.
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