On April 1, 2020, we sent an update to our clients regarding the tax extension and CARES Act that was passed, as well as an update on the market. You can access a pdf of this full update here. A summary of the full article is below.
Tax Extension
As most of you have probably heard by now, the 2020 Federal tax payment and filing deadline has been moved from April 15th to July 15th. At least 37 of the 50 states, including Utah, have also moved their payment and filing deadlines to July 15th. The following link has information on each state as of 3/30/2020. The filing extension also applies to the deadline for 2019 Roth and Traditional IRA contributions.
CARES Act
The CARES Act, which was signed into law on Friday, March 27, 2020, provides fiscal stimulus to individuals and businesses to help the economy survive through the government directed shutdown. In total, the bill provides over $2 Trillion of aid which included around $500 Billion for individual rebate checks, $500 Billion for support for several severely-damaged industries, around $400 Billion support for tax credits for wages and payroll tax relief, over $300 Billion of support for state and local governments, and over $150 Billion for support for hospitals and the health care system. We briefly describe the Act’s key provisions in the PDF linked above.
Market Update
The S&P 500 officially entered a bear market, which is a drop of 20% or more from a recent market high, on March 12. On that one day alone, the S&P 500 dropped in value by 9.5%. The yellow line in the chart above shows the S&P 500 performance since its most recent market high on February 19th compared to the three prior bear markets. It took only 17 trading days to go from all-time high to down 20% which was significantly faster than any of the previous three. As of market close on March 23rd, the S&P 500 was down 34% from its all-time high, which ranks as the 7th worst bear market since 1929, just ahead of the 1987 crash. In the 5 trading days since, in response to the expected monetary and fiscal stimulus from the United States and other countries, the S&P 500 has increased over 17% from its low and is now only 22% below its value on Feb 19th.