February 28, 2020
This week was historic, but it was not one that we will remember fondly. We published two videos this week: Volatile Market (Monday) and Stocks Down 10% from Highs (Thursday) as well as a special Market Commentary newsletter today. Last week the Dow Jones closed near 29,000 but then the 1,000-point steps down went as follows: Monday below 28,000; Wednesday below 27,000; Thursday below 26,000; and Friday below 25,000. U.S. large cap stocks lost about 13% this week as COVID-19 (Coronavirus) started to spread into South Korea, Italy, the U.S. and other countries, stoking fears of a pandemic that would bring global economic activity to a halt. A volatility index, the VIX, hit its highest level since early 2018 and went above 45 for only the 7th time in the past 10 years. On a total return basis, the S&P 500 is still above the peaks of 2018 and at a level we last saw in early October 2019. Somewhat surprisingly, international stock indexes were down but, broadly speaking, lost less than U.S. stock indexes, and gold was down for the week. As stocks declined, bond prices increased, which sent bond yields to record lows. The 10-year Treasury yield declined to 1.13%, and the 30-year Treasury bond yield declined to 1.65%. The very short-term Fed Funds rate is currently 1.58%, and as of this writing, futures markets expect the Fed to lower rates on March 18th by one quarter to one half percent. While this of course would not combat the effects of the virus directly, it would help banks to keep lending activity robust. For more information on the markets or your portfolio, we encourage you to contact your Buckingham advisor.
Ryan P. Johnson CFA, CFP®
Director of Portfolio Management and Research
Commentary Disclosures
