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Markets at Halfway Point of Highs & Lows

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Wednesday, April 8, 2020

U.S. market indexes gave back around 4% of its session gains yesterday, beginning in the pre-market with hopeful signs we may be at the crest of the coronavirus wave to seeing another drop in crude oil prices as a firm deal at tomorrow’s OPEC meeting remains in doubt. This morning, futures are up again ahead of the bell, looking toward successful efforts to treat coronavirus and bail out small businesses as “flattening the curve” efforts stall the domestic economy.

We now see the S&P 500 roughly halfway between its all-time highs on February 19 of this year and its multi-year lows on March 23. Have we already determined the parameters for a less-volatile trading environment as progress continues, or are there more surprises awaiting us around the corner?

The European Union (EU) continues its struggle to reach agreement on a set of economic tools to assist with coronavirus fallout. Negotiations Tuesday evening were less successful than many had hoped they’d be. Now the Bank of France has estimated a 6% contraction in Q1 economic output — the worst since the immediate aftermath of World War II. France’s Finance Minister has even brought the Great Depression into rhetorical discussions regarding the country’s economic fate.

Tomorrow’s OPEC meeting may prove to be a market mover, as oil-rich countries around the globe — including Russia, whose squabble with Saudi Arabia has led to much of the precipitous drop in oil prices recently — try to figure out what to do with massive supply glut issues. Crude oil values fell 9% Tuesday, which was a key factor in the stock market turnaround during regular trading, and are down 17% so far this week. Even a tentative agreement might send a wave of positive sentiment through the market.

Meanwhile, the COVID-19 coronavirus pandemic continues to take its course. The disease has now killed more than the 12K Americans who succumbed to the H1N1 “swine flu” pandemic that hit during the dark months of the Great Recession in 2009. And though data is depicting a parabolic curve emerging in the U.S. epicenter of New York, other hot spots around the country threaten to take this pandemic out deeper into 2020 than many analysts are currently predicting.

That said, Twitter (TWTR - Free Report) and Square (SQ - Free Report) CEO Jack Dorsey has announced he will donate roughly a third of his net worth — $1 billion — to coronavirus relief efforts. He joins philanthropic heavyweights like Bill Gates in putting forth considerable capital to end the deadly pandemic.

Mark Vickery
Senior Editor

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