Week of March 2 - 6, 2020

Capital Market Implications

Last week’s employment reports showcased slow and steady employment growth as nonfarm payrolls grew more than expected and the unemployment rate ticked down.  However, employment reports are backward-looking and last week’s releases do not reflect the initial impact of the coronavirus on the labor market, with sectors such as travel and entertainment expected to be weaker as consumer behaviors change.  Manufacturing releases remain muted as orders again showed declines.

Although quickly overshadowed by Monday’s large drop in stocks, last week saw mixed performance, with most markets ending the week on a positive note.  The S&P 500 and Dow Jones indices both ended the week with positive performance, up 0.7% and 1.8% respectively.  Smaller cap stocks struggled, losing -1.8% and growth continued to be do better than value.  International markets also ended the week on a positive note, with developed markets gaining 0.4% while emerging markets were up 0.7%.  Bonds were mostly positive for the week, with the Aggregate index up 1.9% and both corporate and municipal bonds gaining for the week.  High yield bonds, which are more heavily influenced by movements in stocks markets, were down -0.4% for the week.  Meanwhile, volatility continues to play out this week across both stock and bond markets, and we will have further analysis in next week’s update.