Weekly Market Recap – Week Ending May 1st, 2020
What Did The Market Indexes Do?
|Dow Jones Industrial Average||-0.2%||23,723.7||-16.3%|
|NASDAQ Composite Index||-0.3%||8,604.9||-3.8%|
|S&P 500 Index||-0.2%||2,830.7||-11.8% |
Finally… Some Stability
Although we saw weeks finishing with back-to-back overall declines, as you can see above, the markets are becoming a LOT more stable. Especially from where we were a month or so ago.
This movement to less ups-and-downs is somewhat assuring, and a sign that things are stabilizing a bit as governments across the country begin to reopen and we attempt to get everything under control. The “glass half empty” view of this is, of course, this is the calm before the storm. We’ll see.
What you probably don’t recognize is this past April was one of the best-performing months of the stock market in many years. The S&P 500 finished the month +13%, which is the highest monthly gain since 1987.
The first estimate came back showing the Gross Domestic Product in the United States shrank 4.8% in 1Q20 versus the quarter prior. This is not only the first time since 2014 it’s shrank, but the worst overall since 2008.
This is telling. What happened in the first quarter of the year was unprecedented so it’s not a surprise that these numbers came back unfavorably. What will be interesting, though, is watching the markets and economy for the next three months to see how GDP trends come 3Q.
The Fed Keeps Rates Low
As we anticipated, the Federal Reserve didn’t change their already-low rates last week. The Fed Chairman Jerome Powell said that the Fed is not going to “be in any hurry to withdraw these measures or to lift off, and that they’re “going to wait until [they’re] quite confident that the economy is well on the road to recovery.”
Again, this is good and bad. Good because rates stay low, but bad because the Fed didn’t instill any more confidence in the economy improving any time soon.
Unemployment Expected to Top 20%
Last week, about 3.8 million more Americans applied for unemployment, as the trend continues to rise. There’s a monthly jobs report coming out this coming Friday (May 8th) and it’s widely expected to show a significant increase in unemployment. Many experts are predicting a ~4% increase from March, taking unemployment close to, or over, 20%.