Weekly Market Update 5/8/2020

By May 18, 2020 June 30th, 2020 No Comments
Despite US employers shedding over 20 million jobs in April and first quarter S&P 500 earnings on pace to fall over 13.5% from a year ago, stocks continued to distance themselves from their March lows and the S&P 500 closed over 3% higher on the week. Since mid-March, jobless claims have averaged over 4.7M each week, but markets have still rebounded sharply as investors have braced themselves for very poor employment data. Nonetheless, this morning’s jobs report was historically bad as the unemployment rate surged from 3.5% just last February to 14.7% in April, the highest rate of joblessness since the Great Depression. Hospitality was particularly impacted, losing 7.7M jobs, but no industry was spared and even the healthcare sector experienced 1.4M layoffs last month.  How did stock markets respond? The S&P 500 climbed over 1.25% and the Dow Jones Industrial Average rose over 350 points today as investors continued to focus on reopening. In addition, perhaps today’s sobering labor market data and the inevitable headlines it creates over the weekend adds pressure on local and federal governments to consider additional support measures and/or looser restrictions.

How long fundamentals such as earnings and labor trends can be ignored remains to be seen, but clearly stocks are excited about the prospects of economic reopening coupled with an incredibly supportive Federal Reserve. Retail sales for April will be released next Friday and it will be very interesting to see how markets react to what is expected to be an over 6% decline.    

Coming up next week:
Consumer Price Index
Producer Price Index
Initial Jobless Claims
Retail Sales
Industrial Production
Job Openings and Labor Turnover Survey
Consumer Sentiment

Ian Browning | Director, Investment Strategies & Shareholder
Peter E. Simmons | President & CEO


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