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February Economic Update

Market Summary

The beginning of 2020 entailed many newsworthy developments, including President Trump signing the “Phase-One” China trade deal, heightening tensions between America and Iran, wild swings in the oil markets, an impeachment trial, and stock indices hit record all-time-highs amongst it all.

Mostly positive corporate earnings reports and easing tensions between the U.S. and China lifted stocks for the first half of the month. However, these early monthly gains eroded in late January as the coronavirus emerged as a global health concern, and correspondingly, a concern for the investment markets. To end the month, the S&P 500 ended up retreating 0.16% for the month. (1)

Coronavirus Concerns

Investors worldwide wondered if the flu-like coronavirus would hurt the powerful Chinese economy, where the disease was first reported in December. Nearly 10,000 Chinese citizens had been infected by the end of January, and the World Health Organization declared a public health emergency over the outbreak. If enough Chinese consumers are kept at home, corporate earnings could be hurt, and central banks might have to take action in response to slumping financial markets. A larger scale spread of the virus to the U.S. and/or Europe would undoubtedly cause a larger pullback for the global markets.

Historically, the stock market has very short-term reactions when epidemics arose in the past. The 2003 SARS outbreak, the Ebola scare of 2014, and the Zika virus epidemic of 2016 ended with the S&P yielding a 6-month change of 14.59%, 5.34% and 12.03% respectively. History doesn’t always repeat, but it often rhymes. However, no epidemic is predictable, and these concerns are on the top of Wall Street’s mind at the moment. (2)

Real Estate Market Update

For the entire year of 2019, the number of existing home sales improved by 10.0% in 2019, according to the National Association of Realtors. This happened despite the median sale price of a single-family home rising 7.8% over the year, to $274,500 by December.