May 11, 2020
Note from Cokie: We already know that once the jobs report is released later this week, it will underscore what this pandemic has done to our national economy. It has been devastating. Unemployment rose to 16.1% in April alone. We are faced with the highest unemployment rate since 1948 and this fact more than affects our markets. It keeps everything at an unstable level for so many Americans. The fact is these numbers surpass the 10.8% of 1982 during that double-dip recession. Adding to this woeful reality is the fact that US Stocks dropped dramatically at the end of trading on Tuesday. But economists continue to be hopeful.
Countries that are among the world’s hardest hit by COVID-19 like France and Italy are beginning to reopen their economies. This includes Japan and Singapore, which for the most part had early success in containing the virus.
I continue to anticipate the global recession will be shorter rather than longer, with global growth turning positive in the second half of 2020. Still I also believe that before the economy returns to what we once knew, recovery will take time.
This is why I’m continuing to offer a free 15-minute COVID-Market response call. So, let’s talk. Recovery may be coming, but our financial world has been completely turned around. I will show you have to navigate through these very unsettling times.
Below is a weekly update from Wealth Enhancement & Preservation.
Despite a historic downturn in employment, stocks managed to climb higher last week as investors were emboldened by the pace of economic re-openings, both here and abroad.
The Dow Jones Industrial Average gained 2.56%, while the Standard & Poor’s 500 advanced 3.50%. The Nasdaq Composite Index jumped 6.00% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, slipped 1.09%.[1][2][3
Tech Stocks Power NASDAQ
Last week’s trading was driven by a crosscurrent of emotions – worries about weak corporate earnings pace of business re-openings as well as optimism over the pickup in economic activity and progress on developing a vaccine.
Stocks posted back-to-back daily gains to end the week despite troubling employment data. Perhaps the headline of the week was that the technology-heavy NASDAQ Composite Index moved into positive territory year-to-date.[4][5]
A “Silver Lining” in the Jobs Report?
Last week brought into stark focus the number of jobs lost since the start of the economic shutdown. Since mid-March, unemployment insurance claims have reached 33.5 million. The pace of newly unemployed has slowed down, however, with recent weeks at about half the rate at the peak in late March.[6][7]
April’s employment report, released on Friday, saw a spike to 14.7% in the unemployment rate. As severe as these numbers may be, 88% of April’s newly unemployed characterized their job loss as temporary rather than permanent, as opposed to 47% of the newly unemployed in March who said their job loss was temporary.[8][9]
THIS WEEK: COMPANIES REPORTING EARNINGS
Monday: Under Armour (UAA), Simon Property (SPG), Caesars Entertainment (CZR).
Wednesday: Cisco Systems (CSCO).
Source: Econoday, May 8, 2020
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
Source: Zacks, May 8, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
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| [1] The Wall Street Journal, May 8, 2020 [2] The Wall Street Journal, May 8, 2020 [3] The Wall Street Journal, May 8, 2020 [4] The Wall Street Journal, May 8, 2020 [5] The Wall Street Journal, May 8, 2020 [6] CNBC, May 6, 2020 [7] CNBC, May 6, 2020 [8] The Wall Street Journal, May 8, 2020 [9] The Wall Street Journal, May 8, 2020 |