Hi Everyone,
The stock market finished mixed on Friday, as even though the tech sector and the Nasdaq shined in the second half of the session, the lockdown-sensitive industries remained under pressure throughout the day. The Dow was down 18, or 0.1%, to 25,383, the Nasdaq gained 121, or 1.3%, to 9,490, while the S&P 500 rose by 15, or 0.5%, to 3,044. Decliners outnumbered advancing issues by a 3-to-2 ratio on the NYSE, where volume was relatively light.
Traders said that Friday’s session was yet another confidence booster for bulls as U.S. stocks remained remarkably strong despite negative headlines. As one trader explained, “Stocks closed the day on a decisively positive note on Friday thanks to President Trump’s relatively reserved China-related press conference, but the way equities traded in the face of the weak economic numbers was very impressive, in and of itself, confirming the strong tailwinds on Wall Street.”
The holiday-shortened week started in a bullish fashion, as the promising U.S. COVID numbers, and the announcement of a substantial European stimulus plan lifted risk assets globally. The major indices all hit new recovery highs, even though the tension between the U.S. and China continued to increase. The diplomatic skirmish remained in focus toward the end of the week, and following the passage of the new Chinese national security law for Hong Kong, President Trump announced sanctions targeted at the Asian giant on Friday. The possible collapse of the “phase one” trade deal between the two countries poses a risk to the global economic recovery, especially since the exact damage of the virus is still unknown. Besides the U.S., the reopening push seems to be a success in Europe too, but the increasing number of South Korean cases is casting a shadow on the process.
The key economic releases were mixed for the second week in a row, but we got a trio of massive bullish surprises, which supported equities throughout the week. Monday’s blowout new home sales number triggered a strong rally in the real estate sector, while the Richmond Manufacturing Index and the durable goods report lifted industrials. Pending home sales, the Chicago PMI, the second reading of the first-quarter GDP print, the CB consumer confidence index, and the weekly number of new jobless claims all missed expectations, but the huge drop in continuing claims could be signalling a turnaround in the job market already. The Core PCE Price Index was lower-than-expected while personal spending missed the consensus estimate as well, which could mean that the consumer economy will face headwinds in the coming months.
The global reopening efforts will also remain in focus. Hopefully, Latin America, the new epicenter of the pandemic, will also start to see a drop in the number of new COVID cases, which could lead to another broad push higher on Wall Street.
As always, have a great evening and stay tuned!!!
Joe
