Hello and welcome to this week’s Jones Financial Blog! Our goal at Jones & Associates is to help keep you up to date with interesting current economic/market happenings as well as some proprietary portfolio happenings. Knowledge is power and thought we would share some of ours with you. Enjoy!
All data is for the week ended April 3, 2020.
The equity markets gave back some of the prior week’s strong gains amid concerns of the spread of COVID-19 globally. The benchmark S&P 500 declined 2.02%, the Russell 2000 dropped 6.99% and the NASDAQ was 1.69% lower. Overseas, the developed markets (MSCI EAFE) dropped 3.69% while the emerging markets (MSCI EM) declined 1.18%. Energy and consumer staples were the best performing sectors while utilities and financials were the worst performers. (1)
Interest rates fell by 10 basis points for the 10-year US treasury note and ended the week at 0.62%. Credit spreads (the premium required to take default risk) has been widening since mid-February and has had a negative impact on corporate bonds. Investment Grade bonds (higher quality corporate bonds) are down 3.9% year to date while high yield bonds (riskier corporate bonds) are down 14.8% in 2020. (1)
Oil prices rose by the highest percentage in recorded history on Thursday after the president tweeted that Russia and OPEC would be willing to reduce daily crude oil production. West Texas crude rose by 24.7% on Thursday and closed the week at $29.00 per barrel, up 31.7% for the full week.2
New jobless claims for unemployment benefits doubled those of the prior week, for a two-week hike of nearly 10 million people due to the coronavirus restrictions implemented. This figure is equal to the total for the first 28 weeks of the 2007 recession. (3)
Proprietary portfolio happenings:
Abbott Labs (ABT), a Core Select holding, announced a portable laboratory test kit for COVID-19 which can provide results in as little as 5 minutes. Coinciding with Abbott’s other test equipment, the company expects to produce about 5 million tests in April alone. Shares rose 9% for the week. (4)
Major energy stocks like British Petroleum (BP), Chevron (CVX), and Exxon (XOM) gained between 6-12% last week on news that Russia and OPEC were willing to cut oil production. (5)
Did You Know? The 100 folds in a chef's hat represent 100 ways to cook an egg.Yes, that tall, pleated white hat that chefs wear — technically called a toque — has 100 folds for a reason! According to Reclutant Gourmet, the pleats used to signify a chef's level of experience, like the number of ways he or she knew how to prepare eggs.
Sources: (1) JP Morgan Weekly Recap, (2) Oilprice.com,(3) Dept of Labor 4-2-20, (4) Abbott Labs Investor Relations, (5) Seeking Alpha