There is an old Wall St saying, ‘markets move up by the way of an escalator, and comes down by elevator. We have had an escalator ride since early October, setting record after record!
And now the ‘plunge’ is reminiscent of the elevator drop (of 4 stories).
The market is trying to figure out the full scope of this hideous virus, and the economic impact around the globe.
The Week on Wall Street
Traders paid close attention to coronavirus developments and earnings last week, while wondering how the former might eventually impact the latter. Concern over updated infection numbers moderated risk appetite.
A pair of key stock benchmarks posted similar weekly losses. In New York, the S&P 500 declined 1.25%; the MSCI EAFE index (of developed stock markets away from North America) lost 1.24%. The Dow Jones Industrial Average retreated 1.38% for the four-day trading week; the Nasdaq Composite, 1.59%.1,2
Minutes from the Federal Reserve’s January Meeting
Last month, members of the Federal Open Market Committee felt the near-term outlook for the economy had improved slightly since the last Fed meeting in December. The minutes did note that the COVID-19 coronavirus outbreak “warranted close watching.”
Some analysts have wondered, if the coronavirus threat heightens whether the Fed might cut short-term interest rates this year. The FOMC voted 11-0 in January to leave rates alone.3
Fewer Home Sales, But More Building Permits
Sales of existing homes weakened 1.3% in January, according to a new National Association of Realtors report. On the new home front, the Census Bureau said that the rate of permits for new residential construction neared a 13-year high last month.4,5
Final Thought
At Friday’s closing bell, gold was worth $1,646.60 on the New York Mercantile Exchange. Gold futures traded at a seven-year peak on Friday morning.6
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