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Stocks slumped last week as evidence of the economic toll of the coronavirus continued to mount. In the U.S., a staggering 6.6 million new claims for jobless benefits were filed. In addition, the employment report for March showed the first loss of jobs since 2010, despite being representative of only mid-month labor market activity. Also, manufacturing, factory orders, vehicle sales, construction spending and consumer confidence all declined. The S&P 500^® index shed 2.1 percent on the week. It was the fifth weekly decline in the past seven since the current selloff began, leaving the index down 23 percent year-to-date and down 27 percent from its February 19 peak. Somewhat encouragingly, expected volatility in the S&P 500 declined sharply. The VIX index fell to a reading of 47 from 66 the prior week, extending a decline that began in mid-March when the index reached 83. Stocks outside of the U.S. fell by 2.9 percent in dollar terms for the week. 

The MSCI All Country World index of global equities fell 22 percent in the first quarter. It was the steepest quarterly decline since the end of 2008, in the midst of the financial crisis. The S&P 500^® index fell 20 percent, also its worst decline since the end of 2008. The energy sector suffered the sharpest decline, falling 52 percent as the price of WTI crude oil fell 66 percent in the quarter. Financial stocks were a close second, falling 32 percent. The yield on the ten-year U.S. Treasury note fell from 1.92 to 0.67 percent. 

Stocks staged a powerful rally last week on hopes that the government’s response to the coronavirus will be enough to keep the economy afloat. The S&P 500^® index surged higher by 10.3 percent, including a 3.4 percent decline on Friday, after Washington’s $2 trillion stimulus package, the equivalent of almost 10 percent of 2019 U.S. GDP, came into focus. Coupled with the earlier initiatives of the Federal Reserve to unlock funding markets, investors turned more optimistic that the worst-case scenarios for the economy could be averted. It was just the second positive week for stocks in the past six. The S&P 500 is now 25 percent below its February 19 peak, compared to its lowest point of -34 percent at the close last Monday.