Weekly Market Recap – Week Ending May 29th, 2020
What Did The Market Indexes Do?
|Dow Jones Industrial Average||+3.8%||25,383.1||-10.1% |
|NASDAQ Composite Index||+1.8%||9,489.9||+6.2% |
|S&P 500 Index||+3.0%||3,044.3||-5.0% |
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The Positive Trend Continues
The Dow Jones Industrial Average and S&P 500 closed the week with an uptrend. Both ended up oddly in the vicinity of matching the prior week’s performance of around 3%. The NASDAQ had a lighter week (+1.8%) though the positive pattern carried on, plus the index remains in the green year-to-date.
Overall, this was another favorable week, taking into consideration it was shortened from the holiday. What will be really interesting, however, is observing if and how the riots happening across the country will impact the market (more about this below).
The Month of May Crushed It
We observed some serious firepower from the stock exchange in May. By month’s end, the Dow Jones and S&P 500 rose greater than 4%, while the NASDAQ closed up almost 7% for the month. Now, in comparison to the month we had in April, it’s not even close, but remember that April was coming off of a March that just decimated the stock exchange. Irrespective, these are much more positive indications for the market.
Value Stocks Making a Comeback?
So far this year, growth stocks have done considerably better than value stocks. But what we observed this week could possibly be an indicator that things will adjust a tad. This past week was the second straight week that value stocks (using the Russell 1000 Value Index as a standard) outperformed growth stocks (using the Russell 1000 Growth Index as the point of reference) by about 3%.
Earnings Figures Were Bad
Earnings for the first quarter of the year, at least for companies in the S&P 500, discovered the most detrimental outcome since the third quarter of 2009. Earnings decreased, on average, around 15% for organizations within the S&P 500, in comparison to the very same quarter a year ago. It doesn’t come as a shock, but it’s a bit shocking when you see how undesirable the figures actually had been.
Another bit of data I found fascinating was that around 63% of these companies beat earnings–which means they beat the anticipated earnings predicted by analysts. I would personally have imagined this was a pretty good number, yet apparently it’s the lowest we’ve witnessed in over seven years.
Spending Down, But Income Up?
This isn’t a complete surprise, but data showed last week that consumer spending was in fact down by almost 14% in April. This is the largest monthly decline since 1959–which is when the government started keeping track of this particular information. What’s even more fascinating is the fact that consumer’s personal income increased by almost 11%. The information indicates this has a lot to do with the stimulus payments that went out, however.
New Jobs Report on Friday
This coming Friday, we’re expecting to check out a new jobs report. Not surprisingly, it’ll be highly-awaited. This report will show updates on May’s job losses along with forward-looking projections, which have been challenging considering that the COVID-19 pandemic has thrown such a wrench in the economic climate. If you recall the previous jobs report (April), it revealed an unemployment rate of 14.7% with a total of 20.5 million job losses. It was actually the most significant monthly decline ever documented.
Rioting Across the Nation
Over the past three days, major cities across the country have experienced extreme rioting, looting, and just overall chaos. This is in response primarily to the death of George Floyd last week.
At first, there were peaceful protests. But they quickly evolved into windows being smashed, stores being looted, vandalized buildings and police vehicles being set on fire. Cities like Atlanta, Sacramento, and Chicago (among many other major cities) saw complete chaos, as local governments urged residents to get out of town. We even saw protesters blowing back against police right outside the White House for three nights in a row.
You can definitely read more about it in the news, but my focus here is what impact (if any) this will have on the stock market. The short answer is we just don’t know. This has already been one of the craziest years I can ever recall for the economy and the stock market, so this just adds a new ripple to that chaos.
Early signs of the market on Monday morning showed a pretty steady pace–meaning that the markets haven’t yet reacted to the news. As the rioting continues, we’ll have to keep a close eye on the stock market to see if and how it becomes impacted.
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