Hi Everyone,
The stock market bounced back hard today, erasing most of yesterday’s steep losses. Energy markets settled down, and the global COVID-19 situation continued to improve. The Dow was up 457, or 2.0%, to 23,476, the Nasdaq gained 232, or 2.8%, to 8,495, while the S&P 500 rose by 63, or 2.3%, to 2,799. Advancing issues outnumbered decliners by a 7-to-3 ratio on the NYSE, where volume was relatively light.
Traders said that today’s rally was very impressive on Wall Street, especially in light of the global weakness in risk assets and this week’s massacre in crude oil markets. As one trader explained, “The key sectors all gained ground today, and the key U.S. indices performed much better than their overseas peers, which might provide clues about what to expect in the post-COVID environment.”
Energy markets remained very active today, and the most important crude oil futures contracts all surged higher following two chaotic days of trading. The larger-than-expected U.S. inventory build halted the rally, but the key June WTI contract still finished 15% higher, following its largest daily decline on record on Tuesday. The rising tensions between the U.S. and Iran likely contributed to the commodity’s gains, even though its market remains heavily oversupplied, and the U.S. could run out of storage capacity next month.
We are in for a huge day of economic releases, both internationally and domestically, with a slew of forward-looking measures scheduled to be released tomorrow. The European and U.S. flash manufacturing and services PMIs will likely set the tone for the day, and analysts expect widespread deterioration following last month’s relatively strong numbers. The weekly number of new jobless claims will also be out before the opening bell, and since over 22 million claims were filed in four weeks, anything below the consensus estimate of 4.5 million would be a positive sign for the U.S. economy.
It’s hard to overestimate the importance of tomorrow’s meeting between the leaders of the European Union (EU) as it could define the post-COVID strategy of the alliance. Compared to the U.S. stimulus, the European response was muted, and the financially weak countries of the EU are not in a position to support their economies. Barring a coordinated response to the crisis, countries like Italy could face a full-blown banking crisis, and that risk has been weighing on equities across the continent. The euro has also been drifting lower in recent days since the odds of an agreement are slim. Thus, we could see fireworks across asset classes yet again.
As always, have a great evening, stay calm, stay home, stay healthy, do your part to flatten the curve and stay tuned!!!
Joe
