U.S. markets tumbled as a stimulus bill failed to make progress in the Senate. The Stimulus checks are coming this week, but there is still a tremendous amount of fear from the coronavirus. It appears that many investment banks are seeing light at the end of the tunnel. This morning we published “Goldman Sachs Calls Bottom on S&P 500.” Morgan Stanley published a timeline of the coronavirus that showed the US peaking, which is good but also showed a second peak in December (see the image above).
Asian markets fell. China’s small-cap stocks entered bear-market territory as foreign investors have unloaded $14 billion worth of the country’s stocks over the past month. India’s Sensex Index saw its worst one-day loss ever as the country went into a virtual lockdown to contain the virus outbreak. Australia announced the second round of stimulus worth $38 billion to support individuals and small- and medium-sized businesses.
European markets declined. Germany, Italy, and Greece tightened restrictions on the movement of individuals while Spain sought to extend its state of emergency to fight the virus’s spread. Eurozone consumer confidence fell the most on record in March, but beat estimates, as countries deal with the fallout from the coronavirus. Germany is reportedly ready to help Italy get through the coronavirus crisis. According to Bloomberg, Germany will support Italy receiving an emergency loan from the euro area’s bailout fund.
U.S. markets fell as a potential stimulus package could be delayed. The Senate failed to pass an anticipated coronavirus stimulus package. This sent lawmakers back to the negotiating table to try and find a package that could pass. House Speaker Nancy Pelosi said that the House would be drafting its own stimulus bill. Treasury Secretary Steven Mnuchin remained optimistic on a deal getting done, but stressed the urgency of getting it passed soon. Later in the day, the Senate again failed to advance the stimulus package. After the vote failed again, Senate Majority Leader Mitch McConnell said the stimulus package could now be delayed until Friday. Investment banks continued to slash U.S. gross domestic product (“GDP”) estimates, with Goldman Sachs seeing a 24% decline in second-quarter GDP, Bank of America predicting a 12% decline, and JPMorgan seeing a 14% decline.
The Federal Reserve also announced a huge extension to its asset purchases. And Germany and Australia announced new stimulus plans.
The top sectors today were consumer discretionary, technology, and communication services. Video-game and streaming stocks led the communications sector on positive sentiment surrounding the industries with more states enacting “shelter in place” orders. Electronic Arts (EA), Netflix (NFLX), and Roku (ROKU) all surged higher. Royal Caribbean (RCL) buoyed the discretionary sector after securing a $2.2 billion loan facility.
The worst performing sectors were energy, real estate, and utilities. Valero Energy (VLO) and HollyFrontier (HFC) weighed on the energy sector. Macy’s (M) tumbled after withdrawing its guidance and suspending its dividend because of the coronavirus. Kohl’s (KSS) fell after having its credit downgraded by S&P on the prolonged effect the virus will have on foot traffic.
In the S&P 500, 10 of the 11 sectors finished lower.
The leading sectors were Consumer Discretionary +0.28%, Communication Services -0.50%, and Technology -0.98%.
The laggards were Energy -6.69%, Financials -6.13%, and Real Estate -5.59%.
Oil +3.36% rebounded from its recent selloff.
Gold +5.33% jumped on more potential easing from central banks.
Bitcoin +2.01% rose as the Federal Reserve announced potentially unlimited asset purchases.
Tomorrow, we’re on the lookout for Markit Germany Preliminary Manufacturing, Composite, Services PMI for March, Markit Eurozone Preliminary Manufacturing, Composite Services PMI for March, Markit U.S. Preliminary Manufacturing, Composite, Services PMI for March, as well as earnings from Nike (NKE).
