Happy Friday! The COVID-19 pandemic has been compared by some to being in a state of war. This war has certainly been challenging, but we continue to fight every day for your best interests. Today we celebrate the anniversary of Victory in Europe Day and we recognize the reminder that we will get through this together.
Weekly Market Commentary:
- Since the March 23 low, the Dow and S&P 500 rallied 30%, although they are still down 10% year to date. Meanwhile, small company stocks have lost 21% and international has lost 20% this year. While the recovery seems paradoxical given the economic toll, investors are saying that the economic data is backward looking, and they are looking to next year. With the Federal Reserve and Congress providing record stimulus, there is a high level of optimism in the markets right now.
- Markets continue to recover, but no one can agree if it is sustainable. At the heart of the debate is a phenomenon known as a bear-market rally – a period during a protracted downward trend in which equities stage a short-term revival. Five tech stocks, which form 20% of the S&P 500, are propping up the major indexes even as other kinds of stocks see flat or negative performance.
- The U.S. economy shed a record 20.5 million jobs in April as the unemployment rate skyrocketed to 14.7% — more than quadrupling from the rate seen before the coronavirus outbreak — according to government data released Friday. This is the worst jobs report in history, highlighting the depth of the toll the pandemic is having on the labor market. Chart: Job losses in recessions
- The coronavirus curve hasn’t flattened yet, except in New York. Some of this reported growth could be from better testing, so more cases are now recognized. Health officials are now using other metrics, such as number of deaths, number of hospitalizations, and percentage of tested patients who test positive. Few states have achieved the steady decrease in cases recommended in all public health guidance before reopening.
- Some recent headlines have speculated about the possibility of negative interest rates in the United States. The Fed has adamantly said it does not foresee “going negative” and effectively it won’t lower interest rates below 0%. They are more likely to pursue additional quantitative easing (QE), because data shows it’s more effective. That said, market forces could push rates lower than the Fed desires.
We wish a Happy Mother’s Day on Sunday to all the mothers out there! We know that the holiday celebrations will be a little different this year, but that doesn’t change the respect and love that you all deserve. Take the chance to honor the mothers in your life.
What do you think about this market and economy? How are you doing lately? We’re available via e-mail, phone call, or video conferencing and enjoy the opportunities to touch base with each of you. Enjoy the weekend and we look forward to talking with all of you again soon!
Carol & Tim and your Clear Perspectives team