Despite some gloomy news in terms of the economy, earnings and unemployment rate, we saw the major indexes moving forward by the end of last week. Factors contributing to this were the favorable fiscal and monetary policies of the government targeting the stock market. So, let’s see how the 2nd week of May went.
Monday, May 11, 2020
On Monday, 11 May 2020, the US equity market ended with a mixed session with investors speculating over the benefits of reopening the economy amid the fears of coronavirus cases returning. Healthcare and technology sectors were the market leaders. Apple, Microsoft, and Amazon were the big gainers in the tech sector. It was expected that Trump would make an announcement on new funding for states worth $11 billion to conduct coronavirus tests.
Oil prices were in the breakeven stage. Light sweet crude was up by over 16% during the five past sessions and cost around $24.75 per barrel. This was the result of Saudi Arabia’s announcement that they would reduce daily oil production by 1 million barrels. Most major market sectors underwent big declines. The Dow Jones suffered a 109-point loss or 0.45% to close at 24,221.99. The basic materials sector was down by 2.3% while energy shares lost 1.5%. Technology stocks gained .8% while healthcare shares advanced by 1.9%. Healthcare emerged as the best performing sector in the S&P 500 index. The Nasdaq rose for the 6th consecutive trading session with big tech pushing the index higher, climbing 71.02 points or 0.78% to 9, 192.34, while the S&P 500 index rose 0.39 points to 2,930.19.
Tuesday, May 12, 2020
The major indexes suffered the largest single day drop recorded in seven sessions. There was a break in the longest winning streak this year, lasting six sessions. Session lows were experienced by stocks in the final trading hour. However, ETFs that hold corporate bonds rose on Tuesday as the Federal Reserve began its program to buy the bonds.
Nasdaq ended almost 2% lower, falling 190 points, ending a six-day win streak. Microsoft exerted the most negative impact on Nasdaq, contributing to 4.9 points against the index. The S&P 500 broke its 3-session winning streak, falling 60 points, 2.05%. The Dow fell 457 points or 1.89%. All the major indexes witnessed their worst daily performance since May 1. At the end of the day, stocks were close to session lows and all their earlier gains were erased. Stocks fell after White House health advisor Dr Anthony Fauci cautioned against more “suffering and death” from the coronavirus if the economy is reopened too soon. The overnight session saw US equity futures trading lower, after a report by Fox Business stated that Trump was looking to prevent any investment in Chinese equities by federal employee retirement funds. This brought about concerns that there would be tensions between the US and China.
There were various earnings statements for the latest quarter that seemed to indicate a rise in consumer demand from the dips of March. This raised hopes of improving business conditions. But the quarterly operating results also revealed significant dips.
Wednesday, May 13, 2020
On Wednesday, the US stock benchmarks dipped sharply after Jerome Powell’s grim prediction of how long it would take for the economy to recover following the pandemic-influenced economic lockdown. Powell compared the economic downturn to be more severe than the post-World War II recession. This dashed hopes of the market rebounding from the adverse effects of the pandemic, as businesses in the nation started to reopen. The Dow Jones sank 2.2%, or 516.67 points, to close at 23,247.97. The S&P 500 dropped 1.8%, or 50.12 points, to close at 2,820, while the Nasdaq Composite Index was off 1.6%, or 139.38 points, to close at 8,863.17.
Oil stocks crashed. The prime factors contributing to this were contrasting reports about crude oil inventories. The US Energy Information Administration (EIA) stated that US inventories of commercial crude oil dipped last week by around 700,000 barrels, along with gasoline inventories. But,despite these declines, crude oil inventories are still higher than the 5-year average.
However, the weekly report by the American Petroleum Institute (API) revealed that US crude inventories actually rose by 7.6 million barrels, which is significantly above the expected 4.1 million barrels. Oil stocks Tellurian ($TELL), Patterson-UTI Energy ($PTEN), Nabors Industries Inc ($NBR) and Centennial Resource Development ($CDEV) all crashed.
The reopening of the economy also sent a fear wave among investors who believe this could trigger another spread of the pandemic. American Express ($AXP) and Raytheon Technologies ($RTX) were the Dow components that caused the blue chips to sink lower. Financial and energy stocks were significant losers. Wells Fargo ($WFC) and other banks also dipped.
Thursday, May 14, 2020
The market was on the downside as Thursday’s session started. In just half an hour, Dow Jones slipped by over 450 points. The gloomy picture painted by the jobless claims and weekly layoffs report - which indicated an increase of unemployed individuals in the US to 3 million - was to blame for the market retreating further. In just eight weeks, jobless claim filings had risen to 36.5 million!
But later in the morning, stocks began rebounding quickly. Oil prices rose, and bank stocks had a significant rally from the previous day. The Dow gained 377 points, while the S&P 500 and Nasdaq rose 33 and 80 points respectively. Dow closed at 23,625.34 while the S&P 500 closed at 2,852.50 and the Nasdaq Composite at 8,943.72. Citigroup ($C) and JPMorgan Chase ($JPM) were the banking stocks that led the way. This comeback, though, did nothing to hide Dow’s poorest performance since the latter part of March.
Friday, May 15, 2020
Friday saw oil prices rising and gaining for the third week. This was primarily because crude demand picked up in China after the coronavirus-induced restrictions were eased. This raised hopes of a fading overhang in global supply. Brent crude rose 3.66% or $1.14, and was trading $32.27 per barrel. West Texas Intermediate, in particular, rose 5.9% and traded for $29.52 per barrel, following a 9% jump during the previous session.
Heightening tensions between the United States and China took centre stage. During the course of the session, the Dow Jones dipped by over 271 points as a result of these renewed tensions as well as reports about retail sales sinking by over 16% in April. But the market did spring up after consumer sentiment was reported to have risen to 73.7 in May, from 71.8 in April despite predictions of a fall to 65, according to data presented by the University of Michigan.
As the trading week ended, the Dow was up by nearly 0.25%, or 61 points, to finish at 23,685.42. The Nasdaq Composite and the S&P 500 rose by 0.79% and 0.39% to finish at 9,014.56 and 2,863.70 respectively.
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