by Maurice (Mo) Spolan, Investment Research Analyst
The S&P 500 touched positive year-to-date performance this past week; however, the levels proved ephemeral as Thursday’s large leg down took the index below where it began 2020. Four of the 25 worst market days in history have now occurred in the past three months, according to Michael Batnick of Ritzholz Wealth Management. It is often futile to speculate upon what causes grandiose single-day market moves, such as what we saw Thursday; nonetheless, it appears in this instance that investors were off-put by Fed Chair Jay Powell’s somber economic outlook concurrent with rising COVID-19 cases in several states which have recently relaxed social distancing measures.

Several authoritative institutions released troubling economic forecasts last week, as the Fed, the World Bank and the OECD all reiterated that 2020 will represent one of worst downturns in modern times. To counter, Chairman Powell shared that the FOMC is “not even thinking about thinking about raising rates.” This exemplifies the seesaw between novel monetary policy and extraordinary economic conditions that is likely to steer asset prices for the visible future. The present climate is so unusual in that the key variables determining economic health – virus-related shutdowns and the corresponding monetary stimulus – are both inorganic mechanisms; a massive external shock has been met with a previously unimaginable flood of money into the financial system. We continue to observe the phenomena closely in order to best align long-term financial plans with the ongoing developments.