Please ensure Javascript is enabled for purposes of website accessibility

Stock Market Wrap-Up: Oil Breaks $20; Bond Yields Plunge as Stocks Swoon

By Dan Caplinger - Mar 20, 2020 at 5:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The market finished the week at its lows.

For a good part of Friday's session, it looked as if the stock market might score a rare two-day streak of gains. Those hopes were dashed late in the day, though, as even the outperforming Nasdaq Composite ended up joining the Dow Jones Industrial Average and the S&P 500 with losses of around 4%.

Today's stock market


Percentage Change

Point Change

Dow Jones Industrial Average (^DJI 0.52%)



S&P 500 (^GSPC 0.99%)



Nasdaq Composite (^IXIC 1.24%)



Data source: Yahoo! Finance.

Some other markets saw even more dramatic moves. Crude oil continued its recent drop, passing another key milestone that many would have thought unthinkable just weeks ago. Meanwhile, bond yields moved lower, rewarding those who have hedged their stock portfolios with fixed-income securities.

Oil's glut continues

The price of oil resumed its downward move on Friday, with a dramatic drop of more than $5 per barrel. That sent futures prices below the $20 per barrel mark -- a dubious distinction.

Yet in the stock market, energy companies didn't perform all that badly. The Energy Select Sector SPDR ETF (XLE 1.30%) finished the day up 1%, and Chevron (CVX 1.07%) enjoyed a 4% gain.

Long rows of black oil barrels in a white room.

Image source: Getty Images.

Investors are facing a situation so unusual that it has them in a quandary. On one hand, if oil prices were to remain at levels this low for long, it would cause problems for even the largest energy stocks in the industry. Yet on the other hand, it's highly unlikely that the current conditions in the oil patch will persist for very long. Even with coronavirus-related demand declines helping to push prices lower, marginal producers will have to start shutting down their operations at some point.

No one knows for sure how long they'll have to endure oil prices below $20, but today's stock market action suggests most investors think it'll be only a short time. That could open the door to further share-price declines among energy giants if crude doesn't recover soon.

Bond rates resume their downward trend

Elsewhere, bond prices rose as yields fell. The 10-year Treasury saw its yield drop from 1.12% to 0.94% on Friday, while the 30-year Treasury saw a similar decline from 1.74% to 1.56%.

Those yield declines were good news for investors in bond ETFs, especially those that focus on long-term rates. The iShares 20+ Year Treasury ETF (TLT -0.68%) jumped 7.5% on the day, while the even more rate-sensitive PIMCO 25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ -0.48%) gained almost 9%.

Most investors have focused largely on the stock market, but the bond market has had some even more unusual things going on under the scenes. Liquidity in some key parts of the market has evaporated, and that's created some disruptions that have made investors question whether there could be a systemic impact from the coronavirus outbreak after all.

So far, government officials and central banks have highlighted how healthy the financial system is compared to the 2008-2009 market meltdown. If bond rates keep behaving erratically, though, it could signal a change in that philosophy that investors will want to keep an eye on.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Chevron Corporation Stock Quote
Chevron Corporation
$174.86 (1.07%) $1.85
iShares Trust - iShares 20+ Year Treasury Bond ETF Stock Quote
iShares Trust - iShares 20+ Year Treasury Bond ETF
$115.07 (-0.68%) $0.79
The Select Sector SPDR Trust - The Energy Select Sector SPDR Fund Stock Quote
The Select Sector SPDR Trust - The Energy Select Sector SPDR Fund
$83.99 (1.30%) $1.08
PIMCO ETF Trust - PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund Stock Quote
PIMCO ETF Trust - PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund
$108.98 (-0.48%) $0.53
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$32,391.91 (0.52%) $168.49
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,047.64 (0.99%) $39.63
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,807.73 (1.24%) $145.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.