Overview: Investor fears about the impact of the coronavirus outbreak dominated global headlines last week. The potential global economic impact of the coronavirus was the focus, as earnings and economic data took a back seat. Domestically, the S&P 500 Index was 1% lower for the week and was trading another 1.5% lower before the open on January 27. China stocks (MSCI China index) were down over 4% for the week, as the Chinese government works to isolate impacted cities. Crude oil prices hit a nine-week low on fears of diminishing demand. WTI Oil futures were trading at $52.75 Monday morning, down almost 14% from the start of the year 2020. Bond yields were lower in a flight-to-safety trade, with the 2-year and 10-year Treasury notes trading at a yield of 1.45% and 1.62% respectively. The 10-year Treasury yields are now 30 basis points (0.3%) lower from the start of the year.
Eventually, markets refocus on economic data and corporate earnings. Investors will receive key economic data this week on home sales, consumer confidence and spending, and, on Thursday, gross domestic product (GDP), expected to be 2.1% for the fourth quarter of 2019. Earnings season continues this week with reports that will include large-cap companies such as Microsoft, Facebook, Apple, and Starbucks. So far, about 20% of companies in the S&P Index have reported quarterly results, with 70% reporting better-than-expected earnings.
Sources: Goldman Sachs Asset Management, Pac Global, FactSet
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