The Market Minute
THE MARKET MINUTE: April 29, 2020
Courtesy of Tom Siomades, CFA®
Chief Financial Officer at AE Wealth Management
TODAY’S NEWS
The National Institute of Allergy and Infectious Diseases provided good news today about a possible COVID-19 treatment. Maybe the second time is the charm?
The end to the longest economic expansion on record was made official today – and it was pretty ugly.
The Federal Reserve kept rates at zero during this week’s meeting. They also committed to do whatever they can to get the economy back on track.
CURRENT MARKET DRIVERS
Markets were up today on news that Gilead Sciences had provided the results of two tests showing positive outcomes. The tests indicate that the drug remdesivir could be used to treat the virus.
The first reading of Q1 GDP was even worse than predicted. Calls were for a 4% decline, but we actually dropped 4.8%.
The Fed left rates alone. Chairman Jerome Powell said he would keep rates at zero until we return to full employment.
THINGS TO LOOK FOR
Positive virus treatment news and the Fed pledging to keep rates at zero until we see full employment again were enough for markets to crack out a 600-point rise. It’s almost inconceivable how quickly we dropped nearly 5% GDP in just the last month of the first quarter. When you think about it, we were probably growing at a 2.5% GDP rate in January and February as we hit new record highs in the stock market. If one month created a nearly 7.5% swing, what will Q2 GDP look like?
By contrast, oil was a star today – instead of a villain – jumping 23% on reopening optimism and a slightly less than expected increase in domestic supplies.
Tomorrow we hope to see the level of new claims for unemployment continue to decline. Markets have surprisingly turned a blind eye to the horrific numbers and have continued to rally on Thursdays when these terrible numbers are announced. Let’s see if that trend continues tomorrow.
ECONOMIC VITAL SIGNS
Volatility was down again, while yields inched up a bit as optimism ruled the day. It was a good day today!
Volatility Index: 31.23
10-year Treasury: .63
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