After touching all-time highs again last week, US Equity Markets sold off as an increasing number of companies warned about the financial impact of the coronavirus amid rising reports of infections and deaths. The S&P 500 dropped 1.3% for the week, reducing its gains for the year to 3.3%. The Nasdaq declined 1.6% for the week though remains up 6.7% for the year, while the Russell 2000 (small-cap stocks) fell 0.6% for the week to reduce its gains to 0.6% for the year.
Global equity markets suffered as well last week on renewed fears over the toll from the coronavirus. Developed Markets decreased 1.2% for the week as European shares were hit harder than Asian shares. For the year, Developed Markets have dropped -1.3%. Emerging Markets fell 2.0% for the week despite a rally in Chinese shares, bringing losses for the year down to -2.7%.
Gold prices hit 7-year highs last week, driven by safe haven demand from fears of the coronavirus as well as a sharp decline in interest rates, which reduces the cost of holding gold. Gold prices have actually increased over 8.0% for the year thus far.
Of Interest to Us
US Interest Rates fell notably last week, with the yield on the US 10-Year Treasury closing at 1.47%, not far from its lows back in September 2019 or from the record lows hit in July 2016 of 1.36%. Interest rates appear to be signaling a weaker US economy ahead, which is contrary to the economic data thus far. While we do expect the coronavirus to negatively impact economic activity in the short-term, the question remains whether those impacts will be short-lived or more sustainable.
Market Data
for the week ending 2/21/2020
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