Market developments and recovery progress for March 20

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

Below are the most recent market and economic developments:

  • Nearly all asset classes rallied in early trading on March 20, as local governments continued to roll out “stay at home” orders and policymakers indicated they would do whatever it takes to help the economy weather the coronavirus. 
  • After falling to their lowest level since 2002, oil prices jumped more than 23% on March 19, recouping nearly half of the previous day’s losses and marking oil’s biggest one-day gain on record.1
  • The European Central Bank launched an $820 billion stimulus program to combat coronavirus economic fallout.
  • Several economists and big banks are revising forecasts dramatically lower. JPMorgan Chase, for example, predicts China’s economy will shrink by 40% and US GDP will contract 14% in the second quarter, despite stimulus efforts across the globe.2
  • California issued a state-wide “stay at home” order, closing all dine-in restaurants, bars, gyms, and entertainment venues.

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

  • China reported no new local cases of the coronavirus on March 19—a first since the outbreak began three months ago.3 Experts generally consider an outbreak to be over after 14 straight days without new infections.
  • President Trump signed the second major coronavirus relief bill, providing paid sick leave and food and financial assistance for vulnerable populations. Congress will now turn its attention to an economic relief package, which could include more than $1 trillion in aid for Americans and distressed industries.
  • The world’s largest seaport in Shanghai is picking back up after weeks of a transportation lockdown. Congestion at Chinese ports is easing as port logistics and operations start to recover.4

Some food for thought:

While today’s environment may seem unique, the market action looks a lot like what’s happened in other crises. For example, in September–October 2008, the stock market fell a little more than it has so far this year in an even shorter period of time (just three weeks), with wild day-to-day swings the norm rather than the exception. Investor “pain levels” were just as high then as they are now. And although we may not be through the worst of things yet, once the market has digested the emotional trauma, conditions may be primed for a reversal.

So, despite the headlines of record volatility and historic price moves, investors should remember that we’ve navigated these waters before.

Bottom line: As unnerving as these times may be, keeping cool with a well-diversified portfolio remains as good an approach as any. Investors shouldn’t let everyone else’s panic and chaos become their own. Invest based on personal timelines, goals, and risk tolerance—not on the noise around you.

  1. CNBC, “Oil surges 23% to post best day ever, rebounding from Wednesday’s steep losses,” 3/19/2020, https://www.cnbc.com/2020/03/19/oil-surges-21percent-on-track-for-best-day-ever-rebounding-from-wednesdays-steep-losses.html
  2. CNN, “Wall Street is updating its recession predictions. They're extremely bleak,” 3/19/20, https://www.cnn.com/2020/03/19/investing/premarket-stocks/index.html
  3. The New York Times, “China Hits a Coronavirus Milestone: No New Local Infections,” 3/18/20, https://www.nytimes.com/2020/03/18/world/asia/china-coronavirus-zero-infections.html?te=1&nl=morning-briefing&emc=edit_NN_p_20200319&section=topNews&campaign_id=9&instance_id=16894&segment_id=22376&user_id=5907a09bfb75dbf35537993d15f86005&regi_id=76161369tion=topNews
  4. Al Jazeera, “Ships are finally moving at Chinese ports, but rates soar,” 3/13/20, https://www.aljazeera.com/ajimpact/ships-finally-moving-chinese-ports-rates-soar-200313085112600.html

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