Market developments and recovery progress for April 3

A perspective from E*TRADE Capital Management, LLC 04/03/20

Below are the most recent market and economic developments:

  • According to the Labor Department’s monthly employment report, employers cut more than 700,000 jobs in March, the first decline in payrolls since September 2010. The unemployment rate rose to its highest level since August 2017, from 3.5% in February to 4.4%.1
  • Meanwhile, weekly jobless claims showed 6.6 million people filed for unemployment in the US—double the previous week’s total.
  • After closing the books on the worst first-quarter performance ever, US stocks rebounded on April 2 amid news that an oil-production agreement between Saudi Arabia and Russia could be on the horizon. However, the S&P 500® and Dow fell in early trading Friday after the bleak jobs report.
  • Oil prices surged 25%—their largest single-day rally on record—after President Trump tweeted that he expected Saudi Arabia and Russia would agree to cut production by 10 million barrels. Although the Kremlin denied any compromise was in the works, Saudi officials said they would consider substantial cuts if other oil-producing nations followed suit.2
  • Several states, including Florida, Georgia, Nevada, and Pennsylvania, rolled out statewide stay-at-home mandates this week as global coronavirus cases topped one million. As of April 2, only five states had no known state or local lockdown orders in place.3

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

  • A possible multitrillion-dollar infrastructure plan may be the next phase of stimulus for the US economy. As “phase four” talks evolve, Congress and the White House have discussed plans to create thousands of jobs to combat the virus-driven recession.4
  • The death rate in Italy is slowing and new cases appear to be stabilizing, suggesting the outbreak in the European epicenter may have peaked.5 Meanwhile, on Friday, Spain reported a decline in the death rate for the first time in four days.6
  • The Organization of the Petroleum Exporting Countries (OPEC) and Russia will meet Monday to discuss potential supply cuts, a welcome development in the oil-price war that recently dropped prices to 18-year lows and sent energy stocks tumbling.7

Some food for thought:

While we are in the midst of peak outbreak in the US, economic data has yet to catch up. For example, today’s jobs report showed staggering losses, but since the numbers don’t reflect the last two weeks of March, we still likely haven’t seen the full impact of the nationwide lockdown.

There were some positive developments this week, though, as markets welcomed a potential end to the oil-price war, which could give the energy sector a boost. However, if an agreement doesn’t come soon, the market could get whiplashed from disappointment. Also, although it’s still elevated from a long-term perspective, by early Friday stock market volatility had declined to its lowest level in nearly a month.

Bottom line: While we are likely closer to the beginning than the end of the volatility and economic pain associated with this crisis, the longer-term outlook is more optimistic. Stay the course and keep investing decisions focused on individual timeline, goals, and risk tolerance.

  1. CNBC, “US payrolls drop 701,000 in March, the first jobs decline since 2010,” 4/3/20, https://www.cnbc.com/2020/04/03/jobs-report-march-2020.html
  2. The Wall Street Journal, “Crude Leaps More Than 20% on Hopes Price War Will End,” 4/2/20, https://www.wsj.com/articles/oil-leaps-on-hopes-for-u-s-action-end-to-saudi-russia-spat-11585821756
  3. The New York Times, “See Which States and Cities Have Told Residents to Stay at Home,” 4/2/20, https://www.nytimes.com/interactive/2020/us/coronavirus-stay-at-home-order.html
  4. The New York Times, “Infrastructure Week Returns as Trump and Democrats Eye Post-Virus Jobs Plan,” 4/1/20, https://www.nytimes.com/2020/04/01/us/politics/infrastructure-week-coronavirus.html
  5. Bloomberg, “Europeans See Glimmer of Hope in Italy’s Virus Stabilization,” 4/2/20, https://www.bloomberg.com/news/articles/2020-04-02/europeans-see-glimmer-of-hope-in-italy-s-virus-stabilization
  6. Bloomberg, “Prognosis,” 4/2/20, https://www.bloomberg.com/news/articles/2020-04-02/infections-reach-grim-mark-trump-tests-negative-virus-update?cmpid=BBD040320_OUS&utm_medium=email&utm_source=newsletter&utm_term=200403&utm_campaign=openamericas
  7. CNN, “Oil prices march higher as OPEC calls for emergency meeting on Monday,” 4/3/20, https://www.cnn.com/2020/04/03/business/oil-prices-opec-meeting/index.html

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