Month: April 2020

Equities saw modest losses on the week. The Nasdaq slipped 0.16 percent, the S&P 500 Index 1.29 percent and the Dow Jones Industrial Average 1.90 percent.

Biotechnology extended its winning streak despite concerns over the viability of Gilead’s (GILD) coronavirus drug test. iShares Nasdaq Biotechnology (IBB) rallied 1.25 percent. SPDR S&P Biotech (XBI) was much stronger, rising 5.97 percent.

Energy outperformed after oil prices made a short-term bottom. The May crude oil contract briefly plunged to negative $40. The June oil contract rebounded into the mid-teens this week, while the July contract held above $20. SPDR Energy (XLE) climbed 1.83 percent.

Existing home sales are at an annualized pace of 5.27 million in March, down from 5.76 million in February. New home sales fell from an annualized pace of 741,000 in February to 627,000 in March.

Weekly initial claims for unemployment fell to 4.43 million last week. The April flash manufacturing PMIs show sentiment low among businesses, with the manufacturing PMI at 36.9 and services at 27.0.

The U.S. Dollar Index climbed 0.56 percent this week as the greenback threatens to breakout versus the euro. The dollar saw large advances versus emerging market currencies as well. iShares MSCI EAFE (EFA) slid 0.99 percent and iShares MSCI Emerging Markets (EEM) 1.90 percent.

Bond yields slipped, with the10-year Treasury yield falling to 0.60 percent. iShares iBoxx Investment Grade Corporate Bond (LQD) slipped 0.41 percent and iShares iBoxx High Yield Corporate Bond (HYG) slid 3.43 percent. The decline in HYG is due to concerns shale oil producers could be at risk of going bankrupt.

Many blue-chip companies have delivered solid results, though many firms are not providing future guidance. Netflix (NFLX) beat estimates, but also warned it likely saw a temporary spike in viewing and subscriptions. Shares of Netflix climbed 0.46 percent on the week.

Intel (INTC) also beat results but lowered second quarter guidance and declined to give guidance for the second half of the year. Intel dipped 1.81 percent.

Chipotle (CMG) reported same store sales fell 16 percent, but online sales jumped 81 percent. Anecdotal reports from other fast-food restaurants indicate similar growth in carry-out purchases, offsetting the lack of in-store dining. Chipotle jumped 7.29 percent.

The Nasdaq rallied 7.05 percent this week, the S&P 500 4.59 percent, and the Dow Jones Industrial Average 3.84 percent. Investors reacted positively to the potential opening of the U.S. economy and advancements in COVID-19 treatments. SPDR Consumer Discretionary (XLY) climbed 7.53 percent, SPDR Healthcare (XLV) 7.49 percent and SPDR Technology (XLK) 6.08 percent. iShares Nasdaq Biotechnology (IBB) rallied 10.18 percent.

The White House laid out guidelines for reopening the economy. States should see a decline of cases over a 14-day period, followed by a decline in positive test results, and the hospitals should be capable of handling a new outbreak with ample critical care space, along with frequent testing of healthcare professionals. The first phase of an opening would include restaurants, gyms, and churches, provided they adhere to social distancing and disinfecting regimens. If there is no uptick in cases, schools and youth programs could resume a few weeks later. Phase three would be a wider opening, with various rules relaxed.

Retail sales declined 8.7 percent in March. Sales ex-autos fell 4.5 percent. The National Association of Homebuilders’ confidence index fell to 30 in April from 72 in March. Initial claims for unemployment were 5.25 million.

The U.S. Dollar Index extended its rally this week, increasing of 0.23 percent. iShares MSCI Emerging Markets (EEM) advanced 3.27 percent and iShares MSCI EAFE (EFA) 1.36 percent. Both significantly trailed the returns of domestic equities.

Crude oil fell as low as $18 this week. The spread between May and June contracts widened to $7, with June crude futures selling for $25 per barrel. Prices are falling in the near months because there is a growing lack of storage.

Earnings season kicked off this week. The mega banks reported solid results but made large provisions for credit defaults. Regional bank PNC Financial Services (PNC) gained 0.09 percent for the week, while Citigroup (C) slipped 1.01 percent and JPMorgan (JPM) 4.82 percent.

Healthcare was much stronger led by Johnson & Johnson (JNJ). The firm did not provide guidance for the year but beat estimates and raised its dividend. JNJ advanced 8.69 percent.

Delta Air Lines (DAL) climbed 7.78 percent for the week. Industrial products maker Fastenal (FSAT) rallied 9.71 percent. Proctor & Gamble (PG) provided solid results. The firm also hiked its dividend, prompting shares to rally 9.51 percent. Dividend funds such as Vanguard Dividend Appreciation (VIG) returned 4.55 percent for the week as investors are seeking financially sound companies.