Month: May 2020

Equities extended their recovery with the S&P 500 Index climbing past 3,000 this week. The Dow Jones Industrial Average rose 3.74 percent. The S&P 500 Index and Nasdaq gained 3.25 percent and 2.18 percent, respectively.

Utilities, financials and industrials were the top performing sectors. SPDR Utilities (XLU) advanced 6.86 percent, SPDR Financials (XLF) 6.36 percent and SPDR Industrials (XLI) 5.98 percent. Investors stuck with quality names this week. iShares Edge MSCI Minimum Volatility USA (USMV) outperformed most of the major indexes with a 3.67-percent gain. Vanguard Dividend Appreciation (VIG) also rose 3.67 percent.

Economic data showed the economy in much better shape than forecasted. Home prices increased 4.4 percent in March according to the Case-Shiller index. April new home sales blew away estimates of an annualized pace of 480,000, coming in at 623,000.

Consumer confidence increased in May according to both the Conference Board and University of Michigan Surveys. First quarter GDP was revised to negative 5.0 percent.

Stimulus checks boosted personal income by 10.5 percent. Along with the drop in consumer spending, the savings rate jumped to 33 percent as Americans repaired their personal balance sheets.

Initial claims for unemployment fell to 2.12 million this week, down approximately 300,000 from a week earlier. According to Department of Labor estimates, the unemployment rolls shrank by 3 million the prior week. If their estimates are in the ballpark, this means the overall unemployment rate is starting to decline.

Crude oil climbed above $35 a barrel this week. SPDR Energy (XLE) advanced 0.08 percent on the week.

The 10-year Treasury yield held at 0.65 percent this week. iShares Barclays 20+ Year Treasury (TLT) fell 0.66 percent as a result. Falling credit risk boosted high-yield and corporate bonds. iShares iBoxx High Yield Corporate Bond (HYG) increased 1.76 percent, Invesco Senior Loan (BKLN) 1.23 percent and Fidelity Corporate Bond (FCOR) 1.25 percent.

iShares China Large Cap (FXI) finished the week up 1.27 percent. iShares MSCI Emerging Markets (EEM) rose along with Chinese shares, closing the week with a gain 1.36 percent. iShares MSCI EAFE (EFA) advanced 4.38 percent on the week. The U.S. Dollar Index slipped 1.15 percent.

Equities rallied this week. The S&P 500 Index, Nasdaq and Dow Jones Industrial Average gained a similar 3.56, 3.40 and 3.29 percent, respectively. The small-cap Russell 2000 increased 7.84 percent.

SPDR Industrial (XLI) climbed 7.30 percent. SPDR Energy (XLE) rebounded 6.74 percent, helped by West Texas Intermediate crude oil’s rally into the low $30s. SPDR Consumer Discretionary (XLY) advanced 5.03 percent as the country began reopening. Several states have opened beaches and parks heading into the Memorial Day holiday.

Economic data was solid. The National Association of Homebuilders’ confidence index climbed to 37 in May, up from 30 in April. Housing starts were at an annualized pace of 891,000 in April. Building permits, a sign of future construction, was much higher than expectations at an annualized 1.074 million.

Initial claims for unemployment continued trending lower, falling to 2.44 million.

Flash PMIs for May showed a rebound in the manufacturing and service sectors. The flash PMI jumped from 26.7 in April to 36.9. If openings continue into June, this number could be back to “normal” fairly quickly.

iShares MSCI EAFE (EFA) rose 3.21 percent this week, while iShares MSCI Emerging Markets (EEM) gained 1.11 percent. iShares China Large Cap (FXI) fell 1.32 percent and iShares MSCI Hong Kong (EWH) slid 4.38 percent after CCP-selected politicians pushed through a draft of a national security law in Hong Kong.

The United States and other nations have threatened a response if the law is implemented as written. Earlier in the week, the Senate passed a bill that will allow for delisting of Chinese securities from U.S. markets. China considers financial information a state secret, thus blocking any investigative audits of its companies by the SEC.

The highlight was Wal-Mart (WMT) reporting a 10 percent increase in sales. It indicated online sales climbed 74 percent. Investors largely priced in the good news into share prices; the company slipped 1.15 percent on the week.