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%.
The Quarter in Brief
The spread of COVID-19 sent stocks tumbling in the first quarter as health and economic costs of the pandemic began to mount. Stocks remained under pressure, despite the Federal Reserve’s lowering of short-term interest rates and the government’s stimulus efforts through the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act. The DJIA sank 23.2% and the S&P 500 dropped 20% on the quarter. The COVID-19-related volatility in the market has left all but a handful of sectors in a prolonged period of uncertainty. With millions of Americans staying at home in an effort to “flatten the curve” of COVID-19’s impact on people, businesses are coping with closing for the duration, altering practices, or facing staffing issues.
The oil market dominated the commodities headlines during the first quarter. The failure of Russia to join Saudi Arabia in supporting lower oil production targets left Saudi Arabia fuming and responding with an announcement of its intention to raise oil output. Oil prices plummeted on the news, contributing to the stock market’s woes. While lower oil prices represent a boon to consumers in the form of lower gasoline prices and a relief to companies with high energy consumption (e.g., airlines, chemical), they also pose a risk to the American energy industry.
Should low oil prices persist, it may lead to lower capital expenditures, labor force reductions, and troubles in the credit markets as less-capitalized companies struggle to meet their debt obligations. As the quarter came to a close, there was some speculation that President Trump would take a larger role in working with Russia and Saudi Arabia on production targets.
It is difficult to see, in the middle of the COVID-19 epidemic, exactly what the full impact will be. Suffice it to say, the cost in human terms has been staggering so far and seems certain to affect at least part of the coming quarter. As people and businesses adapt to extended periods of quarantine, the only thing that seems clear is that no aspect of American life will be unchanged. CARES Act stimulus checks are on the way for millions of Americans. The Federal Reserve has lowered interest rates. Further measures are being considered at the state and federal levels. The only two things that seem truly certain are that action is being taken and that we’ll all breathe a sigh of relief once this crisis subsides.
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.
“The question isn’t who is going to let me; it’s who is going to stop me.”
– Ayn Rand
Recipe of the Week
Mozzarella Party Skewers
- 24 red and yellow cherry tomatoes
- 24 bite-sized fresh mozzarella balls
- 1 jar of green olives (24 olives, stuffed with pimentos or garlic, as preferred)
- Thread 6-inch skewers with tomatoes, olives, and mozzarella onto the skewers.
- Create a domed shape with loosely crumpled aluminum foil. Poke spears in to arrange.
Recipe adapted from DinnerAtTheZoo.com
Tips for Young or First-Time Workers: Don’t Forget About Taxes
- Don’t be surprised when your paycheck is smaller than you expect. Employers withhold taxes and pay them directly to the IRS.
- Keep in mind that all tip income is taxable, and you must report tip income over $20 monthly to your employer.
- Even if you don’t earn enough from your first job to owe income taxes, your employer must withhold Medicare and Social Security taxes from your paychecks.
- Any money you earn from working for others is taxable. If you mow lawns, babysit, or earn money outside a regular job, you may be considered self-employed by the IRS.
- Speak to your employer about whether they will be reporting your wages to the IRS. If you have questions, ask your parents or grandparents to put you in touch with a tax expert.
Tip adapted from IRS.gov
A Simple Fix for Skying Your Tee Shot
Tip adapted from Golf Distillery
Staying Close While Social Distancing
- Prioritize initiating interactions with your friends and family who are far away. Send an email, text, or direct message. Call them, and maybe even send a letter via snail mail. If you have the technology available, have a virtual, face-to-face conversation. There are many free apps available for video conferencing.
- Spend quality time with those in quarantine with you. Whether they’re your parents, children, siblings, other relatives, or friends, find activities, like games and family meals, to nurture the bonds you have with the people sharing your home.
- Seek out group activities online. Stream a class or lecture series. Join an online forum or message board. Attend an online watch party for a movie or show. Take a virtual museum tour. You might be surprised by what’s available.
Tip adapted from Success.com
If You’re Able to Go Outside, Leave Only Footprints
Tip adapted from Green America