Market Commentary for the week of April 20, 2020

The Markets

 

Despite massive unemployment reports, stocks rose sharply Friday amid discussions on reopening parts of the economy and hopes surrounding an experimental drug to treat COVID-19. Stocks were also up for the second week in a row. For the week, the Dow rose 2.24 percent to close at 24,242.49. The S&P gained 3.06 percent to finish at 2,874.56, and the NASDAQ climbed 6.09 percent to end the week at 8,650.14.

 

Returns Through 4/17/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	2.24	-14.45	-6.06	8.05	8.99
NASDAQ Composite (PR)	6.09	-3.32	9.34	15.11	13.16
S&P 500 (TR)	3.06	-10.49	1.10	9.11	8.89
Barclays US Agg Bond (TR)	0.70	4.74	11.18	5.06	3.58
MSCI EAFE (TR)	0.77	-19.71	-13.52	-0.45	-0.35

 

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond, NASDAQ and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

 

 

 

 

Not Smart — 54 percent of Americans surveyed in February 2020 said if they inherited $1 million today, they would spend it – as opposed to paying off debt or investing (source: Charles Schwab Modern Wealth Survey, BTN Research).

 

 

Educated — 39 percent of millennials have at least a college bachelor’s degree, and another 28 percent have attended college but not graduated. Millennials were born between 1981-97 and are ages 23-39 in 2020 (source: Pew Research, BTN Research).

 

 

What We Spend in 2½ Days — If the U.S. was to fund the entire $2.3 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act by issuing new 30-year bonds at the long-dated bond’s interest rate from the close of trading on March 31 (1.35 percent), the annual debt service cost would be $31.05 billion per year. During fiscal year 2019, the U.S. had outlays of $12.18 billion per day (source: Treasury Department, BTN Research).

 

 

 

 

 

 

 

WEEKLY FOCUS – Health Provisions in COVID-19 Stimulus Legislation

 

Recent COVID-19 stimulus packages allocated billions to health care providers for eligible expenses to combat the disease and included health-related provisions directly impacting individuals, such as:

 

Sick leave and family leave: Under the Families First Coronavirus Response Act (FFCRA), private-sector companies with fewer than 500 employees and certain public employers must pay qualifying employees up to two weeks, or 80 hours, of emergency paid sick leave. Eligibility factors include personal COVID-19-related care or quarantine (at the employee’s full pay rate) or caring for an ill family member or child whose school or day care has closed due to the virus (at two-thirds their pay rate). The Act caps sick leave payments.

 

Also under FFCRA, qualifying employees caring for children whose school or day care has closed may take up to twelve weeks of family and medical leave. Up to 10 weeks must be paid at two-thirds their regular pay, up to a cap.

 

Employers will receive payroll tax credits for wages paid under the Act’s sick leave and family leave provisions. Businesses that have been forced to close are exempt from the requirement. Firms with fewer than 50 employees may also be exempt.

 

Health insurance: Under the Coronavirus Aid, Relief and Economic Security (CARES) Act, all private health plans must cover coronavirus testing and vaccinations (when available) with no cost sharing. High-deductible health plans will not be in jeopardy of losing their status for offering cost-free telehealth services to members, regardless of whether they have met their plan’s deductible for the year. CARES increases Medicare payments for COVID-19-related hospital stays and durable medical equipment and expands coverage of phone-based health services under Medicare.

 

HSAs and FSAs: CARES overturns an Affordable Care Act provision, allowing Health Savings Accounts and Flexible Spending Accounts to again be used for over-the-counter drugs without a prescription.

 

We hope you and your family are taking every precaution to stay safe and well. Although we currently aren’t able to meet with you in person, we are still available to answer your questions or discuss your concerns. 

 

 

 

 

 

 

 

 

*The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3049613.1