Market Perspective for April 25, 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.

 

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