Since our last communication in March which touched on the potential impact of positive news on equity markets, the U.S. financial markets have staged a dramatic recovery coinciding with the gradual positive developments on the coronavirus and economic fronts. Although there is still a considerable amount of ground to make up to reach the previous market highs of February, tremendous progress has been made since the March lows. During our forty years in business, we have never witnessed a period of extreme volatility such as this. The following chart and accompanying statistics put the decline and ensuing recovery into perspective.
For the February 20 – March 23 time period, there were seventeen days where the S&P 500 posted declines (74% of trading days) compared to six days of gains (26% of trading days). The declining days amounted to a cumulative 65% decline while the positive days amounted to 26% in gains.
For the March 24 – April 30 time period, there were fifteen days where the S&P 500 posted gains (56% of trading days) compared to twelve days of declines (44% of trading days). The positive days amounted to a cumulative gain of 47% while declining days amounted to 21% in declines.
While the rebound off the lows is encouraging, a continuation of this trend will be dependent upon the success in the reopening the economy as well as the fight against the coronavirus. Regardless of what happens in the short term, we remain optimistic on America’s ingenuity and resolve to emerge from these difficult times stronger than ever.
The Lesjak Planning Team