Your Tuesday Market Blip 3/31/20

Your Tuesday Market Blip 3/31/20

Stocks opened the day lower and rallied into positive territory but then rolled over and finished the day with a 410 point drop at 21,917. Trading volume was mixed. Exxon Mobile was the top gainer for the Dow while software tech companies did ok. IBD and BTS remain on the sidelines as the infection rate in the US continues to rise with increased testing. There are hints of a possible infrastructure plan in the works to boost the economy but as of yet there are no details. Q1 2020 is in the books and The Dow is down 23.2% making it the worst quarterly pullback since 1987 when it fell 25.3% in the 4th quarter of that year.
Better than expected manufacturing data from China helped US markets early in the day but several US investment houses like Goldman are projecting US GDP growth will be between negative 20% to 30% or more in the second quarter before bouncing back in Q3 and Q4. While people are rightly cautious these days some investors like Canadian Infrastructure company Brookfield and looking long term. Bruce Flatt at Brookfield put out a letter saying they are looking to pick up bargains in businesses they consider good long term assets like real estate and infrastructure. They noted they are seeing valuations in some industries lower then what they saw in 2008 and 2015.
While oil continues to trade near $20 per barrel and has posted its worst quarterly drop since 2015 Bloomberg reported the White House reached out to Russia and is trying to act as a mediator to bring both Putin and Saudi Arabia to the table to work on a solution to the oil price war. While oil demand has fallen sharply, natural gas demand seems more stable since it is used for electric generation, cooking and heating. As oil drilling starts to curtail it will slow the supply of gas which is a byproduct of the oil drilling process. Some gurus are thinking this could support the price of gas with a better supply demand equation than oil. Meanwhile three states have passed legislation making oil and gas pipelines “critical infrastructure” which offers them more protections from potential shutdowns.