Telemus Weekly Market Review May 18th - May 22nd, 2020

May 18 – May 22 Week in review

The stock market returned to its bullish ways last week, helped by positive news on the development of a vaccine and continuing enthusiasm for a reopening of the economy. The S&P 500 rose 3.2%, Dow Jones Industrial Average gained 3.3%, and the Nasdaq Composite rose 3.4%. The small cap Russell 2000 was the standout, climbing 7.8%.

Most of the week's gains came at Monday's open after Moderna said a Phase 1 study for its COVID-19 vaccine candidate yielded positive interim clinical results. A Stat News article later cautioned about the lack of critical data provided, but Moderna defended its results and NIAID Director Anthony Fauci said he was cautiously optimistic about the data.

Other contributing factors last week included having all 50 U.S. states now partially reopened and Fed Chair Powell reiterating that the central bank is still not out of ammunition.

Nine of the 11 S&P 500 sectors gained at least 3.0%, led by the industrials, energy, and real estate sectors. Transport stocks provided an extra lift for the industrials space, while energy stocks followed oil prices higher.

It wasn’t all good news last week. The market was able to overcome some weak economic data and news of increasing U.S.-China tensions. Weekly initial claims decreased by 249,000 to 2.438 million, bringing the nine-week total to 38.636 million. Continuing claims increased to an all-time high of 25.073 million. Reopening efforts should hopefully bring these numbers down in the weeks to come. U.S.-China news included China indicating plans to implement national security laws on Hong Kong, the Senate passing the Holding Foreign Companies Accountable Act, which requires certain foreign companies listed in the U.S. to certify that they are not owned or controlled by a foreign government, the White House issuing a report criticizing China’s economic and military policies, and President Trump accusing China of a "disinformation and propaganda attack" on the U.S. and Europe.

On the interest rate front it was a relatively quiet week for U.S. Treasuries. The 2 year yield increased two basis points to 0.17%, while the 10 year yield decreased two basis points to 0.66%.

In other markets the U.S. Dollar Index declined 0.6% to 99.77. WTI crude continued to rally closing at $33.25 a barrel. Gold closed at $1,734.70 an ounce, down slightly on the week.

May 25 – May 29 Economic Calendar