There was a tug-of-war last week in US Equity Markets between optimism around the re-opening of the US economy and a surge in COVID-19 cases. Ultimately, equity markets finished the week higher, aided by the announcement from the Federal Reserve that it had begun buying US corporate bonds to help the economy. The S&P 500 rose 1.9% for the week to bring its losses for the year to down 4.1%. The Nasdaq remains the strongest of the major indices, up 3.7% for the week and 10.9% for the year, while the Russell 2000 (small-cap stocks) increased 2.2% for the week and is now down 15.0% for the year.
Global Equity Markets also bounced back last week, as European Union leaders announced additional economic stimulus measures and economic data came in better-than-feared. Developed Markets were up 2.0% for the week and are now down 11.7% for the year. Emerging Markets rose 1.5% for the week to bring its losses for the year to down 10.2%.
US Economic Data largely continues to surprise to the upside. Retail Sales for May surged 17.7%, roughly double expectations, while home mortgage applications for the prior week spiked 21% from a year ago to hit an 11-year high. These data points suggest a relatively robust US consumer eager to resume spending. At the same time, measures of US manufacturing activity for June came in markedly better than expectations including expansions in some regions of the country.
Of Interest to Us
Despite the overall strength in the data points around the US consumer, there was one data point that made us pause....initial jobless claims for the prior week totaled 1.51 million, much worse than expected. Notably, the healthy declines in weekly jobless claims seem to be abating, as the week-over-week drop was only 3.7% vs. mid-teen declines for each of the past several weeks. If weekly claims remain stubbornly high at these elevated levels, that could suggest some issues for the US economic recovery.
for the week ending 6/19/2020
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