Market Perspective for May 8, 2020

The Nasdaq increased 5.95 percent this week, the S&P 500 Index 3.42 percent and the Dow Jones Industrial Average 2.48 percent. Economic data was better than expected, even though there was little good news. Additionally, with many states ending their lockdowns, a quick recovery is raising investor hopes.

Technology helped push the market higher, with SPDR Technology (XLK) gaining 6.62 percent. Additionally, SPDR Communications Services (XLC) rallied 4.67 percent. SPDR Consumer Discretionary (XLY) advanced 4.50 percent, largely due to Amazon (AMZN) and other online retailers.

SPDR Energy (XLE) rebounded 8.35 percent as oil prices stabilized in the $20 range. West Texas intermediate crude finished the week at $24.76 per barrel.

The service PMI was slightly stronger than expected in April, but down substantially as many businesses closed. The April employment report showed 20.5 million job losses, below the expected 22.1 million. The unemployment rate climbed to 14.7 percent, below the estimate of 15.2 percent. Wages soared 4.7 percent, far higher than the 0.8 consensus prediction.

The 2-year treasury yield fell to a new all-time low this week as markets began pricing in negative interest rates. Long-term bond yields went in the other direction, in part because the Federal Reserve eased back on its bond buying as the market stabilizes. The 10-year yield climbed to 1.39 percent. Rising yields sank government and investment grade bonds. iShares 20+ Year Treasury (TLT) fell 2.23 percent. Higher-yielding bonds rallied. iShares iBoxx High Yield Corporate Bond (HYG) advanced 1.33 percent. Invesco Senior Loan (BKLN) added 1.45 percent.

The U.S. Dollar Index rallied 0.71 percent this week, with most of the gains coming versus the euro. iShares MSCI Emerging Markets (EEM) rallied 4.24 percent for the week, while iShares MSCI EAFE (EFA) added 2.66 percent.

Shares of Shopify (SHOP) jumped as much as 20 percent on the week after it said profits climbed 210 percent. The firm provides e-commerce solutions to small businesses.

Nintendo, Activision and Electronic Arts all beat earnings as video game playing increased during the lockdown.

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