Market volatility picked up this week, as concerns linger over the potential global economic impact of the coronavirus. Through last week, there were 71 consecutive trading days without a move greater than +/- 1.0% for the S&P 500 Index. That all changed this week, as the S&P 500 Index fell 1.6% on Monday, and then gained 1.0% on Tuesday. Looking forward, we reference the Chinese concept of yin and yang, the cosmic duality, to describe current market conditions. Market participants have the yin (coronavirus concerns, impeachment, ongoing geopolitical developments, etc.) and yang, (positive economic and earnings reports, steady interest rate policy) as counterbalancing forces in the current environment. Markets have calmed somewhat from the initial blow to investor confidence from the coronavirus. Stocks recovered mid-week after earnings beats from a range of large cap companies including Apple, General Electric, Goldman Sachs, and Boeing. With the Federal Reserve on hold, interest rates remain low. As of mid-week, the 2-year and 10-year Treasury were trading at a yield of 1.44% and 1.63% respectively.
Source: Bloomberg, Barron’s