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Mid-Week Market Minute 2.19.20

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Stocks were relatively flat, in the holiday shortened trading week, as investors continued to weigh the impacts of the coronavirus. In a press release on Monday, the tech giant Apple (AAPL) noted the coronavirus outbreak has “temporarily constrained” global supply and demand and will have a larger than anticipated impact on quarterly earnings. In addition, executives of Walmart (WMT) warned investors of the impact the virus is expected to have on next quarter’s earnings. We can expect similar statements in the coming weeks from many other globally integrated corporations experiencing supply chain disruptions as well as overall downward pressure on demand. Nevertheless, the impacts are likely to be constrained to the near-term and we expect the underlying economic fundamentals to continue driving moderate economic growth over the long-term. The U.S. labor department said on Wednesday that its producer price index (PPI) advanced 0.5% in January, the largest gain in well over a year. Housing stats came in higher than expected, with multiple upward revisions to prior months as well. Interest rates continued to move lower this week, with the 2-year and 10-year treasury notes trading at 1.42% and 1.56% respectively mid-week. We expect this declining interest rate environment to provide a strong backdrop for the housing market as fixed mortgage interest rates are tied closely to the yields on treasury bonds.

Source: Morningstar Direct, CNBC, WSJ Market Data, GSAM, Bloomberg