March 2020 Financial Markets Summary

Stock markets around the world were rocked during the last week of February.  Prior to this past week, markets had been fairly resilient to the coronavirus concerns with the S&P 500 breaking its all-time high on February 17th.  However, everything changed when a rising number of infections in Europe caused investors to fear a global pandemic.

Domestic stocks dropped 15% from their highs, while international and emerging markets fell roughly 12%.  The travel and energy industries have been hit the hardest as many citizens have chosen to cancel their upcoming international trips.  However, large cap domestic stocks are still higher than they were just 12 months ago as shown in the chart below.  Investors have flocked to safe haven assets such as gold and government bonds.  The yield on the 10-year Treasury note dropped to a new all-time low as bond prices rallied, with the yield on the note hitting 1.035%.

Much remains unknown about how far the virus will spread and the ripple effect it could have on economic growth around the world.  According to the World Health Organization, the coronavirus has spread to 46 countries with more than 3,000 deaths.  However, on Friday, China reported 327 new cases, the lowest level since January 23rd.  Hopefully the pace of new cases continues to slow to help stabilize global markets.  Not to minimize the ongoing impact of the coronavirus, but simply to put this into perspective, the influenza disease has caused 12,000-61,000 deaths annually in the U.S. since 2010.

We will likely continue to see a significant amount of volatility over the next few weeks as markets digest this rapidly evolving situation in real time.  However, we suggest that clients not let their emotions influence their investing decisions.  We recommend maintaining a diversified allocation that is consistent with long-term goals.  We remind clients to keep their next 5-8 years of income needs from their portfolio in stable assets such as cash, CDs and short-term bonds.

On a positive note, this volatility has caused mortgage rates to fall close to their record lows.  As of Friday, February 28th, the national average 30-year mortgage rate was down to 3.375%.  We recommend clients review their current mortgage terms and consider refinancing to take advantage of this opportunity to lower the total interest paid on their properties.  Please contact us if you would like to discuss.

Asset Index Category Category Category 5-Year 10-Year
2020 YTD 1-Year Average Average
S&P 500 Index – Large Companies -8.5% 6.1% 7.0% 10.3%
S&P 400 Index – Mid-Size Companies -12.1%  -5.0% 3.4% 9.4%
Russell 2000 Index – Small Companies -11.5% -6.3% 3.7% 8.9%
MSCI ACWI – Global (U.S. & Intl. Stocks) -9.4% 2.9% 5.4% 8.1%
MSCI EAFE Index – Developed Intl. -10.9% -0.6% 2.0% 4.8%
MSCI EM Index – Emerging Markets -9.7% -1.9% 2.7% 3.2%
Short-Term Corporate Bonds 1.2% 4.9% 2.1% 2.2%
Multi-Sector Bonds 3.7% 11.7% 3.6% 3.9%
International Government Bonds 1.6% 5.3% 2.8% 1.2%
Bloomberg Commodity Index -12.0% -11.1% -6.2% -5.6%
Dow Jones U.S. Real Estate 5.5% 8.4% 6.5% 11.3%


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only.  Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy.  It is provided with the understanding that no fiduciary relationship exists because of this report.  Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice.  PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice.  If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives.  All rights reserved.