The Bear Finally Takes The Bull


Weekly Market Update — March 13, 2020


  • This was a week a week to remember, as all kinds of records fell, volatility came roaring back, Treasuries were all over the board, oil plummeted, a pandemic was declared, President Trump announced a national state of emergency and bears roamed Wall Street as the 11–year bull market officially ended
  • When the final bell on Friday afternoon was struck, the week saw the small-cap Russell down a staggering 16.6%, the DJIA was down 10.4%, the S&P 500 gave back 8.8% and NASDAQ retreated 8.2%
  • This week also brought investors the worst day since 1987, forced NYSE trading halts, liquidity injections from the Federal Reserve and other global central banks and the beginnings of what look like a price war on oil
  • In a nutshell, the markets were reacting to the spread of the coronavirus and the impact it is having around the world. Sporting events globally and locally are being cancelled, schools are being shut down and a ban on most flights from Europe took place at the end of the week
  • Politicians debated various stimulus packages and there appears to be agreement that allows for two weeks of paid sick leave, unemployment benefits and relief for small businesses, among other measures
  • The Federal Reserve injected liquidity into the system, the European Central Bank made an emergency 50–basis points rate cut , the Bank of Canada cut rates and the People\’s Bank of China lowered its reserve requirement ratio
  • The price of oil collapsed before markets even opened on Monday as lower demand, too much supply and what appears to be an argument between Saudi Arabia and Russia caused oil to lose 23% on the week
  • U.S. Treasuries were very volatile, as the yield on the 10–year reached another low of 0.40% before rebounding and ending the week at 1.01%
  • Volatility, as measured by the CBOE Volatility Index, skyrocketed to its highest level since the 2008 financial crisis and some were calling for it to double once again as investors flocked to exit equities

Weekly Market Performance

Close Week YTD
DJIA 23,185 -10.4% -18.8%
S&P 500 2,711 -8.8% -16.1%
NASDAQ 7,875 -8.2% -12.2%
Russell 2000 1,209 -16.6% -27.5%
MSCI EAFE 1,492 -17.7% -26.8%
*Bond Index 2,291.79 -2.56% 3.00%
10-Year Treasury Yield 1.01% 0.3% -0.9%

*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.

The Bear Finally Took the Bull Down

The U.S. stock market entered the week in correction territory and quickly moved deep into bear market territory, putting an end to the 11–year bull market run. While bear markets officially start when markets are off 20% from recent highs, the DJIA has fallen 28% from its most recent peak and the S&P 500 is off 27% from its most recent high.


The pace with which the bear kicked the bull off of Wall Street was startling, as markets were setting record highs as recently as mid–February. In fact, the speed with which the bear awakened from its 11–year slumber was the fastest in history, helped by the DJIA\’s worst one–day daily decline since 1987.

Volatility was rampant as the markets swung back and forth by thousands of points from day to day. The aptly named Fear Index, formally known as the CBOE Volatility Index or the VIX, reached its highest level since the financial crisis of 2008. Further, the NYSE\’s “circuit breakers” kicked in on Monday and Thursday when the market fell by more than 7%.

All Sectors are Way Down

Not surprisingly, every S&P 500 sector is down significantly, but the Energy sector is faring the worst, as the price of crude oil has cratered by over 20% on the week.


On the week, the Energy sector is down almost 35%, but Financials, Industrials, Materials and Utilities are off more than 20% as well. On a year–to–date basis, all 11 sectors are painted very red too, with Energy off more than 50% and Financials off almost 35% and the best performing sector – Utilities – shedding over 16% YTD.

For those looking for a silver lining, there is this: the Information Technology sector is up over 5% on a one–year basis (but everything else is negative on a one-year basis).

Oil Gets Hammered

Contributing to the stock sell–off is the tumbling cost of oil. The price of Brent Crude, the international standard, plummeted by almost 25% over the weekend of March 7th and 8th, which was on top of a more than 10% drop on the previous day. On Monday, March 9th, the price of oil was about $34/barrel, its lowest level since 2016, and although Friday saw a small rally, it ended the week just over $33/barrel.


With supply continuing to rise, oil is now in what\’s called a super–contango, which means that future prices are higher than current ones. This happens when an oversupply threatens to be too much for the storage capacities, pushing oil producers to sell excess supply at a discount price today.

Treasuries Were Volatile Too

Treasuries were possibly more volatile than stocks, as evidenced by the yield on the 10–year note dropping down to below 0.35% before the market even opened for the week. When the week was over, the 10–year was significantly higher as it came to rest near 0.90%. The yield on the 30–year was also volatile after reaching a new record low of less than 1.00%.


As a result of the extraordinary activity in Treasury markets, the Federal Reserve injected $1.5 trillion of liquidity into short–term lending markets on Thursday.


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