Markets Respond to a Global "Time Out" By Theresa Gusman, Chief Investment Officer The US equity market was persistently hitting new highs following a 31.5% gain last year – until a few weeks ago. This surge drove the Dow Jones Industrial Average to an all-time high of 29,551 on February 12th. Then the bottom fell out. In response to the spreading coronavirus pandemic and resultant global “time out”, the S&P 500 plunged 33.9% from its peak on February 19th to its trough on March 23rd. For the quarter, US stocks lost 20.6% and global equities fell 24.0%. The healthcare (-13.9%), technology (-14.4%), and utilities (-15.5%) sectors fared best. Energy stocks had their worst quarter ever, falling 53.4% as oil prices plunged 66.4% to $20.50 per barrel from $61.10 at the start of the year. Strategies incorporating environmental, social, and governance (ESG) factors broadly outperformed traditional strategies and indices in the first quarter as the emphasis shifted to quality and sustainability during the “flight to quality” and energy related companies, which are often excluded from ESG strategies, underperformed. Uncertainty surrounding the virus led to a sharp rise in volatility. In mid-January, we noted, “according to the Wall Street Journal, the stock market is in one of its longest historic streaks without a daily move of 1% or more”. In contrast, in March, there was only one day where the S&P 500 did not move by more than 1%. Attention is now beginning to turn to the trade-off between easing the “time out” that has crippled the global economy and spurring new outbreaks of COVID-19. The effort to balance these two conflicting and potentially disastrous outcomes has created a no-win situation for policymakers – and set the backdrop for continued market volatility and unpredictability in the coming months.