Telemus Weekly Market Review June 22nd - June 26th, 2020

June 22 – June 26 Week in Review

A rise in new coronavirus cases put the markets on their heels last week as governments and companies were forced to respond. The Dow Jones Industrial Average fell 3.1%, the S&P 500 2.9%, the Russell 2000 2.8%, and the Nasdaq Composite 1.9%.

This week's biggest decliners were the S&P 500 energy, financials, and communication services sectors.

Adding fuel to the proverbial virus fire was an onslaught of negative sounding developments that heightened concerns about the strength of a recovery. The U.S. reported daily highs in new coronavirus cases amid an acceleration in younger people getting infected. New York Governor Cuomo announced that the tri-state area will be imposing a 14 day quarantine on travelers coming from coronavirus hotspots. The EU was reportedly considering its own restrictions on U.S. travelers, banning them from entering when it relaxes its border restrictions on July 1. Texas and Florida scaled back reopening efforts. Lastly Apple re-closed stores in Houston and Florida, and Walt Disney postponed the reopening date of Disneyland past July 17.

Re-thinking the reopening strategy could temper the rebounding economic data that have contributed to the market's recovery. The latest May economic data showed new home sales rebound 16.6% month over month to a seasonally adjusted annual rate of 676,000, durable goods orders rebound 15.8%, and personal spending rebound 8.2%.

The re-acceleration of cases also threatens to undo some of the progress in the labor market that the government spent a lot of money to stabilize. Weekly jobless claims for the week ending June 20 decreased by just 60,000 to 1.480 million.

In the financial sector, regulators relaxed some Volcker Rule restrictions, allowing banks to increase their investments in a broad set of venture capital funds. Out of an abundance of caution, though, the Fed will require banks to suspend share repurchases and cap dividend payments in the third quarter as a result of potential losses from the shutdown of the economy.

Separately, social media stocks succumbed to heavy selling at the end of the week after more companies halted ad spending on Facebook, which fell 9.5% last week.

U.S. Treasuries finished the week with modest gains. The 2 year yield declined three basis points to 0.16%, and the 10 year yield declined six basis points to 0.64%.

In other markets the U.S. Dollar Index declined 0.2% to 97.45 last week, WTI crude fell 3.2% to $38.49 a barrel and gold closed at $1,784.80 an ounce.

June 29 – July 3 Economic Calendar