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Weekly economic review & outlook
Panic in the Streets (or Panic on the Street)

MAR. 16, 2020

You Need to Know

Week in review

Stock markets fall into bear territory while the Fed goes all-in

Another volatile and negative week on Wall Street ended the 11-year bull market for U.S. equity markets. The Fed surprised with an early rate cut and significant stimulus for the economy.

Inflation held down by falling energy prices

The consumer price index (CPI) decelerated in February as falling gasoline prices slowed inflation with further declines expected for March.

Week Ahead

Forecasts

Decline expected in retail sales

February retail sales are expected to decline, mostly because of a sharp drop in gasoline prices.

Housing starts expected to fall back

After a strong figure for January, starts should retreat in February but remain elevated amid strong housing demand.

No, not the 1950 Elia Kazan motion picture about a budding epidemic in New Orleans, but the behavior of financial markets over the past week in response to the worldwide COVID-19 pandemic. Equity markets remained gripped by coronavirus fears as event cancellations and restrictions aimed at containing the virus’ spread swept the nation and suggested that a recession could be imminent. The S&P 500 index, only one week removed from an 11.5 percent decline, plummeted by another 8.8 percent last week – escaping by the smallest of margins the fastest slip into bear market territory ever on Thursday (16 days) with a sharp Friday rally. At its Thursday close, the S&P 500 index was down by almost 27 percent from its mid-February all-time high. As part of last week’s panic were two of the seven largest one-day percent declines for the index.

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