In stark contrast to a strong 2019 in which the S&P 500 surged over 31%, the U.S. benchmark equity index plunged over 23% from its February 19 record high to cap its worst quarterly performance since the financial crisis. The historic 19.60% quarterly drop was caused by growing evidence that the global COVID-19 pandemic and associated business closures and labor furloughs has almost certainly sparked a recession. In just sixteen trading days from the market’s record high, the viral contagion abruptly ended the longest bull market in history on March 12, lasting 11 years and three days. It was the fastest bear market slide on record.
Swift unprecedented action from the White House, Congress, and the Federal Reserve has gone a long way toward blunting the harshest economic effects that are yet to be fully known. The U.S. central bank slashed interest rates to nearly zero, renewed asset purchases, and launched new lending facilities while pumping hundreds of billions into credit markets to insure adequate liquidity. Meanwhile, President Trump signed into law a massive $2 trillion fiscal rescue package to protect American businesses and households. Even amid signs of calming during the last week of the quarter, another massive Congressional stimulus package is already in the works should the coronavirus spread continue to worsen and deepen economic damage.
- The Dow Industrials and S&P 500 suffered their worst quarterly start to a year ever. The Dow shed 6,621 points (-22.73%) during the quarter.
- The Nasdaq Composite fell the least among the major domestic equity indices, down 13.95% last quarter.
- Treasury prices rallied, as 10-year yields posted their biggest-ever quarterly percentage drop.
- Gold spot prices rallied 3.95% during the first quarter, ending at $1,577.18/oz.
The Quarterly Recap is published by Cetera Investment Management LLC, an SEC registered adviser owned by Cetera Financial Group. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.
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