Philadelphia Fed Index dropped to its lowest reading since July 1980


Weekly Market Update — April 20, 2020

  • It was a very eventful week for U.S. stock markets and the range of performance was stunningly wide
  • NASDAQ leaped 6.1% on the week, far outpacing the 3.0% jump from the S&P 500 and the 2.1% increase for the DJIA
  • Small caps did not enjoy the weekly rally, as the Russell 2000 dropped 1.4%, a huge weekly gap relative to the tech-laden NASDAQ and a big departure from the previous week when the smaller–caps outpaced their larger–peers considerably
  • First-quarter earnings season kicked off as the big banks were the first to report, followed by a slew of economic data that was almost universally negative
  • Retail Sales in March saw a decline of 8.7%, the largest drop in history
  • Industrial production saw a decline of 5.4% in March, the largest drop since 1946
  • The Empire State Manufacturing Survey dropped to its lowest level on record
  • The Philadelphia Fed Index dropped to its lowest reading since July 1980
  • The NAHB Housing Market Index plunged to its record low
  • Housing starts declined 22.3% in March, the biggest drop since 1984
  • The Leading Economic Index for March declined 6.7% in March, its worst decline in 60 years
  • The May contract for WTI crude futures plummeted to $18.14/barrel
  • Initial jobless claims for the week totaled 5.2 million, bringing the four–week total for initial claims north of 22 million
Weekly Market Performance

Close Week YTD
DJIA 24,242 2.2% -15.1%
S&P 500 2,875 3.0% -11.0%
NASDAQ 8,650 6.1% -3.6%
Russell 2000 1,229 -1.4% -26.3%
MSCI EAFE 1,582 -1.5% -22.3%
*Bond Index 2,335.97 0.94% 4.99%
10-Year Treasury Yield 0.65% -0.1% -1.3%

*Source: Bonds represented by the Bloomberg Barclays US Aggregate Bond TR USD. This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.

U.S. Stock Markets Hold Up Well on the Week

With the exception of the smaller–cap Russell 2000 Index, U.S. equities performed well on the week, despite a slew of profoundly negative economic data. The difference in the returns for the major indices was significant, however, as NASDAQ\’s 6% weekly return was double that of the S&P 500 and triple that of the DJIA.


Technology stocks as a group performed well on the week, as evidenced by the tech–laden NASDAQ\’s outperformance but also when reviewing the performance of the technology sector relative to the other 10 sectors within the S&P 500. Growth stocks outperformed value stocks and the large–caps trounced the smaller–caps.

A review of the 11 S&P 500 sectors saw 6 of the 11 painted green, with Consumer Discretionary leading all sectors, helped by a very healthy weekly gain from Amazon. The Energy sector, as has been a pattern for a lot of weeks (months/years) lately, was the worst performer, driven in part by the price of WTI Crude dropping sharply on the week.

Retail Sales Plummet

Most would have expected March retail sales to drop, but the drop was the worst monthly decline in decades. For the month of March, retail sales dropped 8.7%, but when autos and gas are excluded, the drop was 3.1%. Not surprisingly, grocery store sales skyrocketed, registering a jump of 26.7% in March.


From the Census Bureau\’s release on Wednesday:

  • “Advance estimates of U.S. retail and food services sales for March 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $483.1 billion, a decrease of 8.7 percent (±0.4 percent) from the previous month, and 6.2 percent (±0.7 percent) below March 2019.
  • Total sales for January 2020 through March 2020 period were up 1.1 percent (±0.5 percent) from the same period a year ago.
  • Retail trade sales were down 6.2 percent (±0.4 percent) from February 2020, and 3.8 percent (±0.7 percent) below last year.
  • Food and beverage stores were up 28.0 percent (±0.9 percent) from March 2019, while clothing and clothing accessories stores were down 50.7 percent (±1.8 percent) from last year.”

22 Million Out of Work

The much–anticipated weekly jobless claims hit 5.2 million, down 1.4 million from the previous week, but still a number that is difficult to comprehend.

On Thursday, the Department of Labor reported that:

  • The advance seasonally adjusted insured unemployment rate was 8.2% for the week ending April 4, which exceeds the prior all–time high of 7.0% seen in May 1975
  • The four–week moving average for initial claims increased by 1,240,750 to 5,508,500.
  • The four–week moving average for continuing claims increased by 2,568,500 to 6,066,250.
  • On an unadjusted basis, initial claims were highest in the states of California (660,966), New York (395,949), Georgia (317,526), and Texas (273,567).


Housing Starts Plummet

While most intuitively knew that the coronavirus would impact the housing market significantly, it was still startling to see that Housing Starts for March dropped over 22%, the biggest monthly drop in 36 years.

On Thursday, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly released data on the housing market and it was ugly all–around.

  • Single–family starts dropped to a 10–month low of 884,000, a 12% decline from the revised 1,005 million in February
  • Building permits fell 6.8% month–over–month
  • Privately–owned housing completions in March dropped 6.1%
  • Single–family housing completions in March dropped 15% percent below the revised February rate\"HOUSING\"

First Quarter Earnings Season Kicks Off

Earnings season is under way for the first quarter of 2020 and investors should expect mixed results, as companies started the first half of the quarter strong and then endured a brutal second half. And to underscore the chaos of this quarter\’s earnings season, a lot of companies simply withdrew their forecasts for the quarter – with many suspending their forecasts for the entire year.

While less than 10% of S&P 500 companies have reported by week\’s end, the reports are mixed. According to research firm Factset\’s press release from Friday:

  • In terms of earnings, the percentage of companies reporting actual EPS above estimates (66%) is below the five–year average.
  • In aggregate, companies are reporting earnings that are 8.3% below the estimates, which is also below the five–year average.
  • In terms of sales, the percentage of companies (70%) reporting actual sales above estimates is above the five–year average.
  • In aggregate, companies are reporting sales that are 1.2% above estimates, which is also above the five–year average.

Across the Atlantic

  • The STOXX Europe 600 Index was up 0.61%
  • Germany\’s Xetra DAX was up 0.66%
  • France\’s CAC 40 was about the same
  • Italy\’s FTSE MIB was down 2.91%
  • The UKs FTSE 100 Index was down 0.93%
  • The Nikkei 225 Stock Average was up 2.0%
  • The Shanghai Composite index was up 2.0%


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