Market developments and recovery progress for April 22

A perspective from E*TRADE Capital Management, LLC 04/22/20

The latest market and economic developments:

  • US stocks moved higher early Wednesday after a volatile start to the week. Both the Dow and the S&P 500® fell sharply on Monday and Tuesday amid a collapse in oil prices.
  • The US crude oil market suffered its worst two days in history on Monday and Tuesday, as shrinking demand and oversupply left producers with no place to store oil, briefly pushing nearby oil futures prices into negative territory. Prices stabilized in early trading Wednesday.
  • The Senate passed another relief package that includes an additional $484 billion to aid small businesses and hospitals. The legislation now goes to the House, which could vote as soon as Thursday.1
  • As earnings results continue to pour in, many companies have withdrawn guidance for the year due to the pandemic. Businesses such as Coca-Cola, Chipotle, AT&T, and Lyft, cited the difficulty of forecasting performance given the uncertainties of the current environment.2

And here are the most recent updates on our path toward recovery:

  • The number of hospitalized coronavirus patients in New York fell for the eighth-straight day while daily deaths remained below 500. After banning all elective medical procedures in March, Governor Andrew Cuomo said hospitals in areas where the virus is not an issue could resume elective treatments.3
  • Italy is preparing to ease its lockdown beginning May 4.4 Meanwhile, new cases in Germany have remained near three-week lows even as the country lifted some restrictions.5
  • Some Southern states are making moves to reopen. South Carolina allowed retail shops to open on Monday, while the Governor of Georgia said gyms and beauty salons can resume business on Friday, followed by dine-in restaurants and movie theaters next week. Tennessee will let most businesses open on May 1.6 
  • Earnings reports from select companies are sparking optimism that the economy may begin to recover sooner than expected. Results from the likes of Kimberly Clark, Chipotle, and Netflix have been a bright spot of the first earnings season of the new “stay-at-home” era.2

Food for thought:

The government’s move to get more relief to some of the hardest-hit pockets of the economy gave stocks a bump after a rocky start to the week. Recovery-positive news has begun to sprout, be it the additional small business aid, proclamations of increased testing capacities, or more pronounced discussions about easing lockdown measures. That said, there are still more questions than answers when it comes to tangibly bringing the economy back to life again. Until the path becomes clearer, volatility is likely the name of the game, even if it is more muted than we saw in early spring.

Bottom line: Stay the course and keep focused on a diversified portfolio aligned with long-term goals.

  1. CNBC, “Senate passes $484 billion coronavirus bill for small business and hospital relief, testing,” 4/21/20, https://www.cnbc.com/2020/04/21/coronavirus-senate-passes-484-billion-small-business-relief-bill.html
  2. CNBC, “Stocks making the biggest moves in the premarket: Delta, AT&T, Biogen, Netflix, Snap & more,” 4/22/20, https://www.cnbc.com/2020/04/22/stocks-making-the-biggest-moves-in-the-premarket-delta-att-biogen-netflix-snap-more.html
  3. The New York Times, “Several states in the South are moving to reopen businesses,” 4/20/20, https://www.nytimes.com/2020/04/20/us/coronavirus-live-news.html?action=click&campaign_id=57&emc=edit_ne_20200420&instance_id=17809&module=Spotlight&nl=evening-briefing&pgtype=Homepage&regi_id=76161369&segment_id=25607&te=1&user_id=5907a09bfb75dbf35537993d15f86005#link-36972424
  4. The New York Times, “Virus Deaths Tick Upward,” 4/21/20, https://www.nytimes.com/2020/04/21/nyregion/coronavirus-new-york-update.html
  5. Bloomberg, “Italy Expects to Gradually Ease Lockdown From May 4,” 4/21/20, https://www.bloomberg.com/news/articles/2020-04-21/italy-expects-to-gradually-ease-lockdown-from-may-4-conte-says-k99hy7d7
  6. Bloomberg, “Germany’s New Virus Cases Near 3-Week Low as Restrictions Eased,” 4/22/20, https://www.bloomberg.com/news/articles/2020-04-22/germany-s-new-virus-cases-near-3-week-low-as-restrictions-eased

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