Market developments and recovery progress for April 24

A perspective from E*TRADE Capital Management, LLC 04/24/20

The latest market and economic developments:

  • After another volatile session, US stocks closed flat yesterday as investors digested millions more jobless claims and reports of an unsuccessful clinical trial for a prospective coronavirus treatment. The major US indexes were little changed in early trading Friday.
  • An additional 4.4 million Americans filed for unemployment last week, bringing the five-week total to 26.5 million.1 Durable goods orders fell 14.4% in March, the second-biggest drop in history.2
  • The House passed a $484 billion aid package for small businesses and hospitals. The bill, which was approved by the Senate on Tuesday, is expected to be signed by President Trump this afternoon.3
  • For the 119 S&P 500® companies that have reported first-quarter results as of April 24, earnings have fallen by an average 23% according to FactSet.4

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

  • New coronavirus cases in the US increased at the slowest pace yet this month. Reported cases rose by 2.5% on Thursday, lower than on Wednesday and below the 4.1% average of the past week.5
  • In Italy, on Thursday the number of recovered virus patients was greater than the number of new cases for the first time.5 The country has been under a nationwide lockdown since March but is making plans to start easing restrictions in May.
  • New Jersey has expanded testing capacity and sped up results, while reporting a drop in ventilator use.6 Meanwhile in New York, hospitalizations remain “remarkably flat,” according to Governor Andrew Cuomo.5

Food for thought:

With nearly a quarter of the companies in the S&P 500 reporting earnings, the impact of the pandemic is beginning to take shape. While future guidance may be unclear, one thing that results have shown is Corporate America’s ability to adapt and keep going. Despite an overall decline in earnings, there are pockets of the market that continue to grow, demonstrating that innovation is a powerful investment in all circumstances.

And while the latest jobs data is brutal, unemployed statistics are trending downward. As parts of the economy start to reopen, some of the jobs lost could return.

Bottom line: There is still much uncertainty on the economic front, giving way to volatility based on headlines of the day. Investors should keep sights set on the longer term, with a diversified portfolio aligned to individual goals and risk tolerance. 

  1. CNBC, “The US economy has wiped out all the job gains since the Great Recession,” 4/23/20, https://www.cnbc.com/2020/04/23/the-us-economy-has-now-erased-all-job-gains-since-the-great-recession.html
  2. Trading Economics, United States Durable Goods Orders, 4/24/20, https://tradingeconomics.com/united-states/durable-goods-orders
  3. The Wall Street Journal, “House Approves $484 Billion Bill to Aid Small Businesses, Hospitals,” 4/23/20, https://www.wsj.com/articles/house-set-to-approve-484-billion-bill-to-aid-small-businesses-hospitals-11587641659?mod=hp_lead_pos1
  4. FactSet Research Systems, as of 4/24/20
  5. Bloomberg, “U.S. Cases Increase 2.5%, Slowest Pace This Month: Virus Update,” 4/23/20, https://www.bloomberg.com/news/articles/2020-04-22/u-s-cases-slow-new-york-plans-tracing-army-virus-update
  6. Bloomberg, “N.J. Expanding Virus Testing With Cases on Brink of 100,000,” 4/23/20, https://www.bloomberg.com/news/articles/2020-04-23/new-jersey-on-brink-of-exceeding-100-000-coronavirus-cases

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