Week in Review 1.31.2020

U.S. equity markets suffered their largest weekly decline since last August, as concerns about the spread of the Wuhan coronavirus overshadowed the Fed, economic data and corporate earnings reports. Bonds rose as investors sought safe have assets, pushing the 10-Year Treasury yield to a five-month low.In response to rapidly rising new coronavirus cases, global authorities stepped up their efforts to contain its spread. China placed multiple cities, with a combined population of 45 million, under quarantine, airlines cut flights to China, and the World Health Organization (WHO), declared the virus a “global health emergency”. As of Friday, China had reported over 12,000 cases, along with 250 deaths. Twenty-two other countries had also reported cases.

After 57 years, Friday, January 31 marked the UK’s final day as a member of the EU. Now that the UK has left, the difficult work of negotiating multiple trade, travel, and business agreements must begin. UK PM Boris Johnson has stated that he would like to have all such deals finalized by year end. Many experts doubt whether such complex negotiations can be completed in such a relatively short period of time.

As expected the Federal Reserve voted to leave rates unchanged following the conclusion of its January meeting. Current market expectations are for the Fed to cut rates at least twice in 2020.

Through Friday, 225 S&P 500 companies had reported fourth quarter earnings. Thus far, 69% of companies have beaten their earnings estimate. Full-quarter earnings growth is currently forecasted to be -0.3%.