US Equity Markets shrugged off terrible economic news last week, focusing instead on the beginning of the re-opening in several states and the potential economic recovery that it could bring. As a result, the S&P 500 rose an attractive 3.5% for the week to reduce its losses for the year to 9.3%. The Nasdaq rallied a sharp 6.0% for the week and is now actually up for the year by 1.7%, while the Russell 2000 (small-cap stocks) advanced 5.5% for the week though it remains down 20.3% for the year.
Global equity markets were more challenged last week, as geopolitical tensions increased between the US and China. Developed Markets were up 1.0% for the week and are now down 19.0% for the year. Emerging Markets actually fell 0.6% for the week to bring its losses for the year to 18.2%.
US Payroll Data for April were the weakest since the Great Depression. Nonfarm Payrolls fell a staggering 20.5 million for the month, while the Unemployment Rate for April increased to 14.7%. Another 3.2 million people filed unemployment claims for the prior week, bringing the 7-week total of those filing for unemployment claims to over 33 million. Measures of US Service activity for April dropped sharply into contraction territory, posting the lowest readings since March 2009.
Of Interest to Us
The yields on the US 2-Year Treasury and US 5-Year Treasury hit record lows last week, closing at 0.15% and 0.33% respectively. This suggests that the bond markets are bracing for a relatively poor economic recovery, which is in direct contrast to the equity markets, which have rallied over 33% from the lows on March 23rd in anticipation of a strong economic recovery. Who will win this tug of war?
Market Data
for the week ending 5/8/2020
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