Dow, S&P Mark Worst 1st Quarters Ever; Stocks Poised for Lower Open; Gold, Silver Markets in Turmoil

Closing out the first quarter of 2020 with a whimper, stocks opened to the downside, briefly turned positive, but the minor rally quickly fell apart sending the main indices to a close near the lows of the day. On the session, the NASDAQ was the best performer of the majors, the Dow the worst, followed closely by the S&P 500.

Thanks to the Wuhan Flu, coronavirus, COVID-19 or whatever one wishes to call the pathogen making its way around the planet, stocks really took it on the chin to start off the year. The major averages were all lower, even after making all-time highs in mid-February.

It was the worst quarter for the S&P since 2008 and the poorest quarterly performance for the Dow Jones Industrials since 1987. Both the Dow and S&P suffered through their worst first quarter ever. The Dow lost more than 23% of its value in January through March, as the S&P 500 fell 20% in the quarter. The NASDAQ didn't set any records but lost more than 14% in the first quarter.

With supply chain issues affecting companies in February and the advance of the virus in March, there's a good chance that GDP has been so negatively affected through first quarter, growth figures may have a minus sign in front of them when the first estimate of GDP will be announced on the fourth Friday of April. Mark your calendars for April 24 to see if the US will be half way to a recession or barely hanging onto some remnant of growth, any of it likely having occurred in January and early February. Any positive number would uplift the markets, but that is still a long way off and first up are employment figures for March. Wednesday, ADP reports private payrolls for the month and Friday the BLS reports on non-farm payrolls for March. Friday's number ought to be a market mover considering the massive job losses over the past week which will be figured into the calculations.

Gold got clobbered again, losing $46.30 per ounce on the day, dipping from $1623.40 Monday to $1577.10 Tuesday. Silver lost eight cents, closing out at $13.92. These prices are for paper contracts on the COMEX and other futures markets and are not aligning with current physical market dynamics. Both gold and silver are in short supply and dealers worldwide are charging severe premiums and assigning minimum purchases in some cases. Silver generally can be had for $20 to $25 per ounce. Gold is selling at roughly the $1800 level, though delivery times are delayed with waiting times up to 45 days in some cases.

As the futures prices and physical market prices diverge and decouple, it's only a matter of time before the fraudulent practices of settling contracts in cash rather than metal at the COMEX will become common knowledge and an open scandal as buyers standing for physical delivery are denied their right. As the coronavirus panic and attendant market turmoil extends, expect precious metals to rise dramatically in price as true owners of the metal divorce themselves from the bogus futures market.

The same is already occurring in the oil market with Saudi Arabia offering steep discounts to the published prices. WTI price continues to trend around $20 per barrel with gas prices across the United States, Canada and throughout Europe (using the Brent crude standard) at multi-year lows.

Experiencing more flattening across the curve, the treasury complex saw yields rise at the short and long durations, with the belly (1-year through 7-year) flatlining. As was the case with equities, bonds were little moved on the day.

ADP announces March private payrolls at 8:15 am ET on Wednesday. Futures are nearing limit down heading toward the opening bell.

At the Close, Tuesday, March 31, 2020:
Dow Jones Industrial Average: 21,917.16, -410.32 (-1.84%)
NASDAQ: 7,700.10, -74.05 (-0.95%)
S&P 500: 2,584.59, -42.06 (-1.60%)
NYSE: 10,301.87, -132.88 (-1.27%)