March (market) madness

Mike Loewengart, Managing Director of Investment Strategy

E*TRADE Capital Management


March was a tough month to say the least. As the coronavirus gained a foothold in the US, we found ourselves living in an unsettling new world of lockdowns and “social distancing,” while the economy went into hibernation and market volatility hit levels investors hadn’t experienced in a dozen years. But a bright spot also emerged on the horizon: Life in China started getting back to normal, suggesting the US could soon have an end in sight as well.

US equities

March ushered in the end of the 11-year US bull market. Stocks officially moved into bear-market territory mid-month after falling 20% below their February highs, and the S&P 500® and Dow Jones Industrial Average eventually fell more than 35%. But stocks recovered some of their losses toward month-end as the Federal Reserve and Congress unleashed unprecedented monetary and fiscal stimulus to support the economy and financial markets. Small caps suffered the steepest losses, hit particularly hard by the nation-wide lockdown.

March 2020 US equity performance

FactSet Research Systems

Traditionally defensive sectors like consumer staples, health care, and utilities were the strongest performers in March. Financials lost ground throughout the month as the Fed cut interest rates to zero and indicated a low-rate environment will be a way of life for the foreseeable future.1 The energy sector was the worst performer, set against a backdrop of $20 oil and a bleak demand outlook.

March 2020 sector performance

FactSet Research Systems

International equities

International equities fared modestly worse than their US counterparts. While Asian markets are now looking to restart their shuttered economies and soften social distancing measures, much of Europe is still on lockdown and facing the peak of the coronavirus outbreak.

March 2020 international equity performance

FactSet Research Systems

Fixed income

Fixed-income returns varied widely. Intermediate and long-term US Treasuries were the strongest performing fixed-income assets, while corporate bonds were among the weakest—even investment-grade corporates were firmly in the red. Municipals significantly underperformed Treasuries. But the riskiest parts of the fixed income market, such as high-yield corporate bonds and emerging market debt, performed the worst.

The yield curve steepened last month, largely a result of the Federal Reserve moving short-term rates to zero.  

US Treasury yield curve, March 31, 2020

FactSet Research Systems

Looking ahead

Despite the market turmoil, there were several positive developments last month. Central banks and governments around the world stepped in to fight the pandemic in full force. In addition to cutting interest rates to zero, the Fed announced an unprecedented quantitative easing program—committing to purchasing an unlimited amount of bonds and securities to help markets function smoothly.2 The Bank of England, European Central Bank, and Australia’s government and central bank also ramped up support.

President Trump signed the largest economic relief package in US history, which included $2 trillion in financial aid and loans to help individuals and businesses affected by the virus-driven lockdown (you can learn more about the legislation here). Also, Congress has already begun talks for a “phase four” plan which may provide more direct payments to Americans and additional funds for state and local governments.3

We know the ongoing uncertainty is unnerving, but we will continue to keep you up to speed on the latest market developments. In the meantime, keeping cool and maintaining a well-diversified portfolio remains as good an approach as any. Here’s what we’ll be keeping an eye on in the weeks ahead:

  • Economic data: While a recession is all but certain (and many analysts would argue we’re already in one), key numbers released in the coming weeks and months will provide an indication of just how sharp the contraction may be, and what the recovery may look like. Market watchers will be looking at GDP, unemployment, and corporate earnings reports to help gauge the timeline for the road back to economic expansion and full employment.
  • Virus developments: While health officials haven’t seen a decline in the number of new cases just yet, there are glimmers of hope that social distancing measures are beginning to curb the spread. Hot spots like Seattle and New Rochelle, NY, for example, have started to see a slowdown in new cases and infection rates.4,5 For those looking for the light at the end of the tunnel, the latest virus numbers may be key.
  • The longer-term outlook: While the seriousness of the current environment shouldn’t be downplayed, the long-term perspective is more optimistic. As Fed Chairman Jerome Powell pointed out, unlike many other past downturns, there is currently “nothing fundamentally wrong with our economy,” and once the outbreak is under control, there is a good chance for a rebound.6

Thanks for reading. Stay safe and healthy—we’ll talk to you again next month.


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  1. CNBC, “Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program,” 3/15/20,
  2. CNBC, “The Federal Reserve just pledged asset purchases with no limit to support markets,” 3/23/20,
  3. Bloomberg, “Pelosi Begins Drawing Up Next Stimulus With More Aid for States,” 3/30/20,
  4. The New York Times, “New Rochelle, Once a Coronavirus Hot Spot, May Now Offer Hope,” 3/27/20,
  5. The New York Times, “Coronavirus Slowdown in Seattle Suggests Restrictions Are Working,” 3/29/20,
  6., “Fed chairman Jerome Powell: There’s nothing fundamentally wrong with our economy,” 3/26/20,
Mike Loewengart
Managing Director, Investment Strategy, E*TRADE Capital Management, LLC

Mike Loewengart is the Managing Director of Investment Strategy for E*TRADE Capital Management, LLC. Mike is responsible for the asset allocation and investment vehicle selections used in E*TRADE’s advisory platforms. Prior to joining E*TRADE in 2007, Mike was the Director of Investment Management for a large multinational asset management company, where he oversaw corporate pension plan assets. Early in his career, Mike was a research analyst focusing on investment manager due diligence for the consulting divisions of several high-profile investment firms. Mike holds series 7, 24, and 66 designations, as well as the Chartered Alternative Investment Analyst (CAIA) designation. He is a graduate of Middlebury College with a degree in economics.

Andrew Cohen, CFA
Senior Director, Investment Strategy, E*TRADE Capital Management, LLC

Andrew Cohen is the Senior Director of Investment Strategy for E*TRADE Capital Management, LLC. Prior to joining E*TRADE, Andrew was the Director of Investments and Operations for a large Registered Investment Advisor, where his responsibilities included investment manager research, asset allocation, and portfolio construction. Previously, he was a Senior Research Analyst and Team Leader for a leading wealth management platform. He is a CFA® charterholder and a member of both the New York Society of Security Analysts and CFA Institute. He is a graduate of Virginia Tech with a BS in finance.

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