Week in Review 2.28.2020

U.S. equity markets ended the week lower with the S&P 500 and Dow posting their biggest one-week declines since 2008 as investors fretted about the rapid spread of the coronavirus and the breadth of its economic impacts. The S&P’s drop marked the quickest -10% correction in the index’s history. Reflecting the increased volatility, the CBOE Volatility Index (VIX) hit 40 on Friday, doubling the index’s value from the prior week. For reference, the index hit 36 amidst the volatility in late December 2018 and soared above 90 in 2008. The 10-Year Treasury yield hit an all-time low of 1.12% as investors sought safe haven assets. Oil fell -15% this week on concerns of declining global demand.
As of Friday, the World Health Organization had reported 84,000 cases of coronavirus and over 2,800 deaths. A spike in reported infections outside of China, including surges in Italy and South Korea, left investors worried about the spread of the virus. In Japan, all school were closed until April while Switzerland banned all public gatherings and events until further notice. In China, the government employed back-to-work programs, which saw over a third of employees outside of Wuhan returning to work.
Through Friday, 95% of S&P 500 companies had reported fourth quarter earnings. 71% of companies have beaten their earnings estimate and 65% have beaten their revenue estimates. Fourth quarter earnings growth is currently forecasted to be 0.9%.