Weekly Market Recap – Week Ending May 15th, 2020
What Did The Market Indexes Do?
|Dow Jones Industrial Average||-2.6%||23,685.4||-16.3%|
|NASDAQ Composite Index||-1.1%||9,014.6||+0.8%|
|S&P 500 Index||-2.2%||2,863.7||-10.7% |
The stock market didn’t have a fantastic week, but it wasn’t terrible. As you can see from the data above, stocks dipped as the major indexes fell between 1 and 3% last week. Out of the previous four weeks, this was the third time we’ve had a declining week.
This could be normal market behavior, or it could be the start of a more significant decline. With governments reopening and people starting to leave their homes, it will create a lot of uncertainty–both socially as well as in the markets.
Deal of the Day: Chase is now offering a $200 cash bonus when opening a Total Checking Account. No minimum deposit and all deposits are FDIC insured up to the $250,000 per depositor maximum.
Value Stocks Have Struggled, Too
What’s interesting is that growth stocks have completely crushed value stocks this year. It’s been a minor headline since the stock market was wreaking havoc on everyone a month ago, but this tidbit is worth noting.
A growth stock is one that’s considered a bit riskier. It tends to be a younger company that doesn’t pay dividends and instead reinvests those profits into the company–hence, the growth. Companies like Tesla and Facebook are growth stocks.
On the other hand, value stocks are your blue-chip, older companies that have sound financials, pay a dividend, and tend to be excellent long-term investments. They’re the ideal investment for a value investor.
But looking at the data, the Russell 1000 Growth Index has remained pretty level this year (minus a big dip in the third week of March), while the Russell 1000 Value Index has dropped more than 23% this year. A small data point for sure, but something to think about if you’re investing in individual stocks right now.
Oil Goes Up Again
Man has oil been wild this year. Prices for oil went up again (third week in a row) and closed at more than $29 per barrel. Less than three weeks ago, the price was around $12.
There have been recent declines in oil production alongside a boost in demand now that cities are beginning to reopen slowly. Oil tends to do its own thing and doesn’t necessarily correlate with the stock market evenly, but it’s still a worthwhile commodity to watch during this time.
Retail and Industrial Production Fall in April
Last week I mentioned that we would be waiting on some pretty significant numbers that would indicate how the economy is doing–such as retail sales and industrial production. Well, the numbers are in, and it doesn’t look great.
So what exactly does this mean? Honestly, not a ton. It validates what we have been assuming–that people aren’t out shopping as much, and the production of industrial goods would naturally slow down.
But again, this is worth keeping an eye on, especially as people begin to leave home and re-enter society. Ideally, things like retail sales should correlate with more people out shopping, but if it stays stagnant, it could be cause for concern.
Consumer Prices Fall Slightly
Consumer prices, a critical factor that helps measure inflation, dropped a shade under 1% in April (0.8% to be exact), which was unusual since there was a cash infusion via stimulus checks that same month.
As an example, if you have more money in your hands, it’s anticipated you’ll spend that money (but we already saw the retail data), and thus, prices should stay flat or trend upward – not go down.
Now, such a small drop isn’t cause for panic, but with the amount of money that was infused, it’s a little surprising. As the House looks to pass new bills this month, we’ll want to see:
a) if those bills get passed,
b) if that means more stimulus money, and
c) if that has any effect on the inflation rate.