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Special Market Update: March 20, 2020

Stocks closed higher yesterday as the market tries to put in a bottom.

The Dow is now up 6.18% off its lows, with the S&P up 5.65%, and the Nasdaq up 6.94% off its lows and today seems like a positive open.

We could still go lower. And I expect plenty of additional volatility. But it appears that the bottoming process has begun. At least for now.

Investors cheered Wednesday’s passage of its second coronavirus relief bill.

The market is anxiously awaiting the proposed $1 trillion stimulus bill that’s aimed at helping businesses and workers, which includes low interest loans, unemployment insurance, and cash payments to individuals who are temporarily out of work due to the social distancing shutdown.

The Fed also pledged to backstop money market funds. This comes on the heels of a 150-basis point rate cut, and more than $2 trillion in liquidity and QE measures.

Around the world, central banks are also doing what they can to stimulate and protect their economies. The European Central Bank (ECB) announced an $820 billion stimulus plan. And the Reserve Bank of Australia (RBA) just cut their interest rates to 0.25%.

These unprecedented actions are expected to shorten the outbreak, lessen the economic pain, and usher in a robust recovery.

Of course, the main focus remains on slowing the spread of the virus and what Investors will be looking for is a break in the trajectory of coronavirus cases in relation to China & other nations who have gone through it and are now on the other side. Once we know that our containment measures are having a positive impact, and that our road to recovery will be better and faster we will see the economy rebound.

When this is over, the economy and stock market are expected to skyrocket as pent-up economic demand is unleashed.

In the meantime, continue to look at this pullback as an opportunity.

Because the U.S. economy is sure to emerge stronger than ever before, but we must tackle two issues at the same time, the pandemic and the economy. This will test our leadership and every American’s willingness to help one another in these difficult times.

At BWFA we remain optimistic long term but realistic on short term hurdles that we will all face together. We need to be patient, confident and understanding that we will come through this stronger and more united than ever before. Americans are resilient and incredibly innovative, and this is a chance for us to shine in a period of immense adversity.

 

 

 

Robert G. Carpenter

President & CEO
Baltimore-Washington Financial Advisors