What a difference a day makes. All the S&P 500 sectors are in the red today. However, it has been one a great month. Technology, while down, has fared the best, and is currently up 3% for the week.  Utilities are still the worst performing.

The Fed

The Fed was serious when it said it will use all its tools to help stimulate the economy. Today, they announced the expansion of its soon-to-launch “Main Street Lending Program.” The program, which was unveiled three weeks ago, is lowering the minimum loan size from $1m to 500,000 to allow for more small and medium business to get financing due the coronavirus pandemic. The Fed is also increasing the pool size of the program to $600 billion for business with up to 15,000 employees and up to $5b billion in revenues in 2019.

Our Fed is not the only one willing to do whatever it takes.  This morning, the ECB left its key interest rates unchanged.  It is also offering 4-year loans with negative interest rates as low as minus -1%.  Yep, -1%.  Christine Lagarde, ECB President, said the eurozone could shrink up to 12% this year. And as such, the ECB is ready to increase the size of its Pandemic Emergency Purchase Program, or PPEP, “by as much as necessary and for as long as needed” to counter the downturn.

Investor Sentiment

Overall, investor sentiment  improved this week. However, oil was a leading concern.

The AAII asked a special question this week on how oil prices were impacting their outlook.  Two out of five, or 43% of respondents, said it was making them more bearish. Thirty-five percent are now more bullish and 22% are not affected by oil prices.

Here is a sampling of the responses:

• “Oil price decline is a somewhat bearish signal for me. But the sector has good future value—with companies that have solid balance sheets.”
• “Here in oil-rich Oklahoma, the state economy will ‘tank’ until the price of WTI crude increases. Personally, does not impact my investment decisions. I do not own any exploration and production stocks.”
• “I figure oil prices will remain low for quite a while. Small producers will go out of business. However, after things settle down, it really doesn’t change my outlook for the big picture.”
• “I see oil prices as a positive! Low oil prices help the costs of companies struggling from the pandemic.”

Employment Cost

The Employment Cost Index for the first quarter rose 0.8%, after rising 0.7% in the fourth quarter of 2019. Wages and salaries increased 0.9% and benefits 0.4%, and make up 70% and 30%, respectively, of the overall compensation costs.  The increase in employment cost matched the peaked rates from 2017 and 2018.

Compensation Cost for 12-month period ending March 2020:

• Civilian workers +2.8%. Wages and salaries +3.1% and benefits costs + 2.1%.
• Private industry workers +2.8%. Wages and salaries +3.3% and benefit costs +2.4
• State and local government workers +2.8%. Wages and salaries + 2.7% and benefit costs +3.3%.

After the Bell

There are some big names reporting after the bell and tomorrow morning.  All eyes will of course be on Apple (AAPL) and Amazon (AMZN).  But other big names that will give us a read on current conditions, including Amgen (AMGN), Clorox (CLX), Colgate-Palmolive (CL), Honeywell (HON), Estee Lauder (EL), Visa (V).  In total there are approximately 175 names reporting.  Stay tuned as these reports will surely move the markets.