Market developments and recovery progress for March 25

A perspective from E*TRADE Capital Management, LLC 03/25/20

Below are the most recent market and economic developments:

  • Stocks surged on March 24 in anticipation of the Senate passing the latest fiscal stimulus/economic relief bill. The S&P 500® rallied more than 9%, its fourth-biggest up day of the past 30 years.
  • The Senate announced it reached a deal with the White House for the $2 trillion economic relief bill. While full details of the package have not yet been revealed, Majority Leader Mitch McConnell said the bill would include direct payments to American households, enhanced unemployment insurance, emergency loans to small businesses, and resources for hospitals.1 The Senate is expected to pass the legislation today, which will then go to the House for approval.
  • The International Monetary Fund expects a global recession this year at least as acute as the 2008–2009 financial crisis, but also said it will be followed by a recovery in 2021.2
  • The 2020 Summer Olympics in Tokyo have been postponed until 2021 but will still be dubbed “Tokyo 2020.”

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

  • Travel restrictions in Hubei province, China, were lifted after two months of lockdown. Chinese officials also announced that public transportation in Wuhan—the original epicenter of the outbreak—will resume on April 8.3
  • President Trump is considering easing stay-at-home guidance and reopening the US economy by April 12, despite warnings from health experts that cases would spike if the population resumed normal activity.4 
  • Several large retailers have increased hiring to meet rising demand. While small businesses have been forced to cut back staffing, many big companies providing food, home delivery, and essential services are looking to attract hourly workers by enhancing benefits, like paid sick time, childcare, and cash bonuses.5

Some food for thought:

Tuesday’s “relief” rally may have been a breath of fresh air, but volatility is likely to remain elevated as we await the peak of the US coronavirus outbreak and the full-throated beginning of recovery efforts. Even if events unfold in a nearly best-case-scenario, investors should keep in mind there will likely be setbacks in the weeks and months to come as the lockdown makes itself felt in GDP, jobs numbers, and other economic data.

Bottom line: While the emotional urge to attempt to time the markets is now stronger than ever, recognize that this typically results in diminished returns over time. For investors pursuing long-term goals, the only way to stay on track is by staying the course with a level of risk that is tolerable through the inevitable ups and downs. History has shown us that straying from this approach increases the likelihood that investors may miss out on the returns they are due.  

  1. CNBC, “White House and Senate strike a deal on historic $2 trillion coronavirus stimulus bill,” 3/25/20, https://www.cnbc.com/2020/03/24/coronavirus-updates-congress-gets-closer-to-a-deal-on-massive-stimulus-bill.html
  2. Bloomberg, “IMF Sees a Recession at Least as Bad as Global Financial Crisis,” 3/23/20, https://www.bloomberg.com/news/articles/2020-03-23/imf-sees-recession-at-least-as-bad-as-global-financial-crisis
  3. The New York Times, "China to Ease Coronavirus Lockdown on Hubei 2 Months After Imposing It," 3/24/20, https://www.nytimes.com/2020/03/24/world/asia/china-coronavirus-lockdown-hubei.html
  4. CNN, “Trump says he wants the country 'opened up and just raring to go by Easter,' despite health experts' warnings,” 3/24/20, https://www.cnn.com/2020/03/24/politics/trump-easter-economy-coronavirus/index.html
  5. The Wall Street Journal, “Coronavirus Sparks Hiring Spree for Nearly 500,000 Jobs at Biggest Retailers,” 3/23/20, https://www.wsj.com/articles/coronavirus-sparks-hiring-spree-for-nearly-500-000-jobs-at-biggest-retailers-11584984596?mod=djem10point

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