Market developments and recovery progress for April 27

A perspective from E*TRADE Capital Management, LLC 04/27/20

The latest market and economic developments:

  • Despite a Friday rally, stocks posted their first down week since April 3 amid historic oil-market volatility and disappointment about a hoped-for coronavirus treatment. 
  • US equities were higher in early trading Monday as discussions around reopening the economy gained momentum.
  • The Bank of Japan announced additional stimulus measures to help the Japanese economy combat the blow from the pandemic, including a pledge to purchase an unlimited amount of bonds.1 The US Federal Reserve and European Central Bank will also hold policy meetings this week.
  • The US Commerce Department will report first-quarter GDP on Wednesday. Economists are widely expecting the data to show the US economy contracted for the first time in six years.2

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

  • Plans to reopen the hardest-hit US state are taking shape. Governor Andrew Cuomo laid out a phased approach for restarting New York following the state’s lowest daily coronavirus death toll in a month. Some businesses upstate may gradually reopen after May 15, beginning with manufacturing and construction.3
  • Over the weekend, Spain and France reported the smallest number of virus-related deaths this month. In the US, the number of new cases was below the one-week daily average, and on Monday, Hong Kong reported no new cases for the second consecutive day.4
  • Italy set several key dates for reopening businesses and easing social-distancing measures. Starting May 4, Italians will be able to enjoy public parks and get carry-out from restaurants. Museums and other public venues will reopen on May 18, followed by restaurants, bars, and salons on June 1. Schools will resume in September.5

Food for thought:

This is a huge week on the economic data and corporate earnings front. Central banks in the US and Europe have their first policy meetings since announcing emergency monetary actions in March, and while neither is likely to adjust interest rates, market observers will be pouring over statements for insight on the extent of the economic damage and how the global economy may be poised to recover. 

Meanwhile, more than 1,000 companies are set to report first quarter earnings, including big tech, energy, and pharmaceutical names. 

Bottom line: While the market may be responding to positive strides toward reopening the economy, we are likely facing a week full of dismal data. Investors should ignore the short-term "noise,” keep their sights on the big picture, and invest based on individual timelines, goals, and risk tolerance.

  1. Reuters, “Bank of Japan expands stimulus as pandemic pain worsens,” 4/26/20, https://www.reuters.com/article/us-japan-economy-boj/bank-of-japan-expands-stimulus-as-pandemic-pain-worsens-idUSKCN22902K
  2. The Wall Street Journal, “If the First-Quarter GDP Report Looks Bad, the Second Quarter Will Be Worse,” 4/26/20, https://www.wsj.com/articles/if-the-first-quarter-gdp-report-looks-bad-the-second-quarter-will-be-worse-11587909612
  3. The New York Times, “Reopening of New York Could Begin Upstate After May 15, Cuomo Says,” 4/26/20, https://www.nytimes.com/2020/04/26/nyregion/new-york-coronavirus-reopening.html
  4. Bloomberg, “U.S. Cases Up 3.3%; Italy to Start Easing Lockdown: Virus Update,” 4/26/20, https://www.bloomberg.com/news/articles/2020-04-25/u-s-cases-rise-4-5-u-k-premier-returns-to-work-virus-update
  5. The Wall Street Journal, “Italy to Reopen Gradually Starting on May 4,” 4/26/20, https://www.wsj.com/articles/italy-to-reopen-gradually-starting-on-may-4-11587935242

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