March Market Overview

Business person working at desk looking at charts

March proved to be a remarkably volatile month as COVID-19 continued to spread and wreak havoc on the global economy. While the S&P 500 closed out the month with only a 12.4% decline, it was, at one point, down in excess of 24%. The rebound later in the month was largely attributable to government actions designed to mitigate the impacts of the virus and provide stability throughout the financial markets.

Specifically, the Federal Reserve announced that it would provide unlimited liquidity in an effort to maintain much lower interest rates and facilitate smooth credit markets. Shortly thereafter, Congress passed a $2T stimulus package to provide additional support to both businesses and individuals. We applaud the moves by both the Fed and Congress to incentivize businesses to keep their staff employed while supporting the American people, with measures that include stimulus checks for low-middle income families, increased unemployment assistance, the option of postponing mortgage payments for those experiencing financial hardship, and more.

Fixed Income indexes were mixed for the month, with safe-haven U.S. government bonds rising. At the same time, corporates declined due to higher default risk among those companies most severely impacted by the virus.

While it’s still too early to know the total economic impact of the virus, it will be substantial—and U.S. economic data has only just begun to illustrate the fallout. The most notable data indicator so far: initial unemployment claims, which have crushed prior records for two consecutive weeks.

Looking forward, investors are sure to have plenty of news to digest over the next several weeks as economic data pours in, corporations start reporting their first-quarter results, and stimulus funds work their way into the economy. Given the uncertainty around these updates, as well as the daily news of the virus’s spread, we expect to see more days ahead with above-average price swings. While we continue to monitor economic developments daily, we endeavor to look beyond the daily price swings and maintain our long-term investment philosophy, confident that this, too, will pass.

The monthly Market Overview is written by two members of MACRO’s Investment Committee, Mark Cortazzo, CFP®, CIMA®, and Christopher Moffett, CFA.

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