April 20 – April 24 Week in review
The major indexes declined for the first time in three weeks, as investor sentiment was kept in check by worries over the continuing economic impact of the coronavirus, intense volatility in the oil market and valuation concerns. The losses weren't that bad, however, with the Dow Jones Industrial Average losing 1.9%, the S&P 500 losing 1.3%, and the Nasdaq Composite losing 0.2%. The small cap Russell 2000 was the sole bright spot gaining 0.3%.
The big news item last week was when the price for the May WTI futures contract collapsed to a negative $37.63 a barrel on Monday. The negative print was the first time in history the market saw oil below zero, as no one wanted to take physical delivery given the well documented storage constraints and lack of demand globally.
The rest of the WTI crude futures curve was dragged noticeably lower, too, with the June WTI contract touching $6.50 a barrel at its low before snapping back to $17.03 a barrel by week's end. On a related note, President Trump alleviated some worries regarding potential job losses in the industry after vowing to protect energy companies with appropriate funding.
The rebound in oil, and President Trump's comments, helped the S&P 500 energy sector close in positive territory last week. It was the only sector to close higher, with the real estate, utilities, and consumer staples sectors declining the most.
Investor concerns over the markets getting ahead of themselves likely contributed to the week's decline because the S&P 500 was up 31.2% from its March 23rd low coming into the week.
Last week’s losses were kept at a minimum, however, because investors are hoping the economic news won’t be as bad as feared. For example weekly initial claims showed signs of easing with claims for the week ending April 18 decreasing by 810,000 to 4.427 million.
In addition, the economy will be buttressed by another $484 billion in stimulus after the White House passed a relief bill for small businesses, hospitals, and COVID-19 testing. Separately, some therapeutic hopes were somewhat dampened last week after a report was released that Gilead's Remdesivir drug flopped in its first randomized clinical trial in China. Note, this was different from the trial in Chicago that showed promising signs.
U.S. Treasuries saw limited action last week. The 2 year yield was unchanged at 0.20%, and the 10 year yield declined five basis points to 0.60%.
In other market the U.S. Dollar Index advanced 0.5% to 100.25 and gold closed at $1,745.70 an ounce.
April 27 – May 1 Economic Calendar