June 1, 2020

Weekly Market Commentary May 25th to May 29th 2020

The first noteworthy economic datapoint in a very busy week was the Chicago Fed’s National Activity Index (which gauges overall economic activity and is comprised of 85 monthly indicators) declined in April to its lowest level since the data series inception in 1967 at -16.7, down considerably from a reading of -5.0 in March.

New Home Sales surprised to the upside in April, increasing by 0.6%. However, sales are set to drop considerably with Pending Home Sales declining -21.8% in April and are down -33.8% from a year ago.

Q1 GDP was revised from -4.8% to -5.0%. Overall, the report showed that the economy was in better shape at the end of the quarter however, because inventories rose less than originally reported and personal consumption was marginally better. Q2 is looking far worse; forecasted to decline by 30-40%, which would be the biggest historical quarterly decline.

Weekly Jobless Claims were reported at 2.1 million, bringing the total number over 40 million for the past 10 weeks, but continues to moderate while Continuing Claims fell from 24.9 to 21 million.

April Durable Goods Orders declined significantly for the second consecutive month by -17.2% after declining by -16.6% in March. “Core” orders excluding transportation and defense fell by a marginally better -5.8%

The S&P 500 opened quickly out of the gates after the long holiday weekend, reaching an 11-week high on optimism relating to states reopening and new developments around potential Coronavirus treatments and vaccines. President Trump’s announcement of a Friday press conference to address tensions with China slowed the rally, but the index closed up by 3.1% to 3,044 for the week. The 10-Year U.S. Treasury Yield started the week at 0.66% reached a high of 0.73% on Wednesday, before closing almost unchanged at 0.65%

Key economic data to be released next week includes several service and manufacturing indices, Factory Orders, and most importantly May Employment data.