MENU

The week in review – US financial markets
  • Read Time: 4 mins

Economic and political backdrop

Some encouraging data on a stabilisation in coronavirus (officially designated last Wednesday as COVID-19) infections helped spur gains in equity markets for much of last week, before a jump in reported cases on Thursday appeared to cause a pullback. Investors also seemed reassured by Federal Reserve Chair Jerome Powell’s congressional testimony on Tuesday and Wednesday, in which he indicated the policymakers were “closely monitoring” the spread of the virus.

While Powell also remarked it was “just too early to say” how the global economy would be affected, a consensus seemed to grow that the Fed would cut rates in the coming months. By Friday, according to CME Group data, investors were pricing in a high (82%) chance of a federal funds rate cut in 2020, with approximately an almost even (46%) chance of two cuts or more. However, the Fed’s announcement on Thursday that it was shrinking the size of its purchases of Treasury bills to support the repo market for short-term lending, seemed to derail the day’s rally.

The focus on the virus may have taken the spotlight off some other important and potentially negative developments on the US-China trade front. Last Monday, the Department of Justice (DOJ) indicted four members of the Chinese military for their alleged role in stealing data from credit reporting firm Equifax in 2017. On Thursday, the DOJ announced a racketeering investigation into Chinese telecom giant Huawei Technologies for allegedly engaging in stealing intellectual property from US firms.

Last week’s economic signals were mixed, particularly on the labour market. On Tuesday, the Labour Department reported that job openings had fallen sharply in December, reaching their lowest level in two years. However, weekly jobless claims, reported Thursday, remained near multi-decade lows. Friday brought news that retail sales had expanded a respectable 0.3% in January, but industrial production had declined for the second consecutive month. The shutdown of Boeing’s 737 MAX airliner production and the impact of coronavirus on supply chains are leading many economists to push back their expectations for a recovery in the US manufacturing sector.

Equity markets

The S&P 500 returned 1.6% (5.2% YTD). Stocks recorded a second week of solid gains as investors seemed to grow more confident about the containment of the coronavirus. The gains brought the large-cap indexes and the Nasdaq Composite to record highs, with the latter receiving an extra boost from the continued strong performance of technology stocks. Trading volumes trailed off considerably early in the week, however, hitting year-to-date lows last Monday. The small real estate sector outperformed within the S&P 500, helped by strong gains in the shares of cellular tower operators. Consumer staples shares lagged.

Fixed income markets

Pandemic fears may have played a role in pushing the US 30-year Treasury bond yield to a record-low 2.06% at an auction on Thursday, but the 10-year Treasury yield ended the week roughly unchanged at 1.59%. 

The investment-grade corporate bond market saw balanced buying and selling activity, although the energy sector experienced volatility, largely due to concerns about the impact of the coronavirus on global oil demand. The price of a barrel of Brent ended last week at US$57.3. 

202002-1092148

Sign up for US Equity insights from T. Rowe Price

Share this article:

Share on linkedin
Share on email

For professional clients only. Not for retail distribution.

Notes

All data and index returns cited herein are the property of their respective owners, and provided to T. Rowe Price under license via data sources including Bloomberg Finance L.P., FactSet & RIMES, MSCI, FTSE and S&P. All rights reserved. T. Rowe Price seeks to cite data from sources it deems to be accurate, but it cannot guarantee the accuracy of any data cited herein. Neither T. Rowe Price, nor any of its third-party data vendors make any express or implied warranties or representations and shall have no liability whatsoever with respect to any data and index returns contained herein. The data and index returns cited herein may not be further redistributed or used as the basis for other indices, as a benchmark or as the basis for any other financial product.

Important Information

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.

It is not intended for distribution to retail investors in any jurisdiction.

This material is issued and approved by T. Rowe Price International Ltd, 60 Queen Victoria Street, London, EC4N 4TZ which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.

© 2020 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

You might be interested in…

See our comprehensive range of US equity funds

Thank you for registering for US equities updates. The latest insights will be sent straight to your inbox, in the meantime access our latest thinking:

Important Legal Information

This site is intended for financial intermediaries in the United Kingdom. I have read the terms detailed below and confirm that I am a financial intermediary and that I wish to proceed. By accessing this website, you consent to T. Rowe Price collecting information by way of cookies.

Information contained in the T. Rowe Price website is not intended for investors in any jurisdiction in which distribution or purchase is not authorised, including the jurisdiction of the reader of this information, where applicable. For example, the information herein is not for distribution to and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States of America to or for the benefit of United States persons.

Information obtained from this site is intended specifically for the individuals who have agreed to these Terms and Conditions and may not be redistributed without prior consent from the T. Rowe Price Legal department.

The information is designed for professional investors, including financial intermediaries or members of the media, and is published for informational purposes only. In particular, the information is directed at only informing persons falling within one or more of the following categories:

(a) A government;
(b) A bank or insurance company;
(c) A pension fund or charity;
(d) Persons whose ordinary activities involve them, as principal or as agent, in acquiring, holding, managing or disposing of investments for the purposes of a business carried on by them or whom it is reasonable to expect will, acquire, manage or dispose of investments for the purpose of such a business;
(e) Persons whose ordinary business involves the giving of advice, which may lead to another person acquiring or disposing of an investment or refraining from so doing;
(f) Representatives of the media for corporate and background information about T. Rowe Price.

Persons who do not fall into one of the above categories should not act upon the information contained herein.

Certain persons may have access to information regarding the T. Rowe Price Funds SICAV, an investment company incorporated as “Société d’Investissement à Capital Variable” (‘SICAV’) under the laws of Luxembourg and the T. Rowe Price Funds OEIC, an open-ended investment company (‘OEIC’) incorporated in England and Wales. The sub-funds referred to on the site are only offered by the current prospectus. The prospectus contains more complete information about the sub-funds, including investment objectives, charges and expenses. However, the prospectus and other information relating to the sub-funds will not be intentionally distributed to persons in any country where such distribution would be contrary to local law or regulation.

Past performance is not a guide to future performance. The value of securities and any income generated from them might decrease as well as increase. Changes in rates of exchange may also have an adverse effect on the value, price or income of securities. Investors should also be aware of the additional risks associated with investments in emerging markets, high yield securities and smaller companies.

This information herein does not constitute investment advice and the products described may not be available to or suitable for all investors. You should consider, if appropriate, obtaining independent professional advice before making an investment decision.

Unless otherwise noted, the content appearing in this Section of the T. Rowe Price website has been issued by T. Rowe Price International Ltd, 60 Queen Victoria Street, London EC4N 4TZ, which is authorised and regulated by the U.K. Financial Conduct Authority with the reference number 194667.