For the month of April, the S&P 500 posted its strongest gain since January 1987. The benchmark index surged nearly 13% last month, reaching a level just 1.1% below the end of February. Remarkably, the S&P 500 has recovered more than 30% from its March 23rd low.
The rally last month has been nothing short of astonishing given today's economic environment. In just six weeks' time, efforts to combat the spread of COVID-19 contagion have pushed over 30.2 million Americans to file for unemployment benefits. Furthermore, Federal Reserve Chairman Jerome Powell has warned that economic activity will contract far more aggressively during the second quarter and alluded to the notion that additional government spending and support may be needed to jumpstart economic activity.
While the Fed's unlimited firepower has not been enough to prevent an economic decline, its unprecedented steps have kept an economic crisis from morphing into another financial crisis. Driven by four massive federal relief programs and expectations that the economy may soon begin to heal, investors have recently focused on two significant developments: a quickening in the pace of state re-openings and positive results from a clinical trial of a treatment for COVID-19. Both developments bring us one step closer to answering questions that continually weigh on the minds of investors: what's being done to stop the spread of the virus and what's being done to limit the economic disruption.
Although equities have performed well recently, concerns remain that may lead to volatility in the coming weeks. The reopening of large swaths of the economy may or may not go as planned. Another wildcard will be consumer behavior. Prior patterns are unlikely to return to pre-crisis behavior, at least right away, and social distancing at restaurants, airlines, and industries that require person-to-person interactions could limit activity and sales.
We do think there will be opportunities in this market but are looking for more clarity before getting too optimistic.
Your well-being is of foremost importance. We will continue to monitor the economic and market implications of the COVID-19 pandemic and make accessible updates as soon as they are available.
Remember, I am here to help you and your family answer any questions that you may have. As always, feel free to contact me directly at 330-908-1087 or you can e-mail me as well.
Stay healthy, stay safe and stay positive!
The views stated in this letter are not necessarily the opinion of Cetera Advisors LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.