A Forced March Lower

Monthly Market Snapshot: March 2020


Stock benchmarks experienced their worst month (and quarter) since the Global Financial Crisis as the spread of COVID-19 forced investors to rush to safe-haven assets as economic activity shut down across many regions. In the United States, the S&P 500 plunged 12.5% in March while the Dow Jones tumbled 13.7%. The 10-year U.S. Treasury yield plummeted from 1.15% at the end of February to 0.67% at the end of March.

The coronavirus continues to cloud the economic outlook. A deep economic contraction is widely expected. Investors are less certain about the trajectory of the recovery. If containment measures and warm weather are successful in combating the virus, then a V-shaped recovery may be possible. However, if the duration of the pandemic is extended, then the recovery may take longer than markets are pricing in. Small business solvency remains a key question.

On February 24th, Citi Private Bank’s Global Investment Committee (GIC) decided to reduce its exposure to global equities. Those reductions were offset by adding to the GIC’s overweight position in U.S. Treasuries and gold. Citi’s year-end target for the S&P 500 is 2,700 and presents upside from today’s levels.