Weekly Snapshot June 1st, 2020
Market Review: Week Ending 5/29/2020
The S&P 500 Index rose again last week, closing at 3044 (+3.0%) and is now down only 5% in 2020.1 Powered by the weight of the easy money from the Federal Reserve and Fiscal Stimulus from Treasury (totaling over 45% of GDP combined1), stocks continue to discount only good news, while ignoring the bad. This week’s bad news included demonstrations throughout the country following the unfortunate and terrible death of unarmed George Floyd in Minneapolis from excessive police force. Additionally, tensions in Hong Kong over China’s ruling effectively banning peaceful demonstrations that led to the revoking of HK’s special trade status with the US – which could lead to a resurgence of trade tensions between the US and China (though stopping short of withdrawing from the Phase 1 trade deal). Finally, President Trump’s battles with Twitter following their decision to apply fact-checking labels on two of the President’s tweets led to an Executive Order that, while unclear about its scope beyond stripping certain legal protections social media companies enjoy, threatens to limit certain content from all social media and Technology platforms, threatening the business models of the market’s large index leaders. Twitter fell 9% last week1 during the flare-up, and while other Tech giants were largely spared, the Technology-led Nasdaq Index rose less than other indices, gaining 1.7% last week.1 The rotation into beaten-down companies thought to suffer most during Covid-19 continued last week, as the S&P 500 sectors Financials (+6.4%) and Industrials (+5.9%) outpaced the averages1. Energy (+0.5%), Communications (+1.2%) and Technology (+1.7%) stocks trailed the overall Index.1 10-year Treasury bond yields fell 5bps last week, ending at 0.65%,1 supported by continued purchases by the Federal Reserve who also reported on their first-ever purchases of Fixed Income ETFs in May. Through the close Friday, year to date results for the major indices are as follows: S&P 500 -4.9%, Russell 2000 -15.9%, MSCI EAFE –14.3% and Bloomberg Barclays Aggregate Bond 5.5%.2
What We’re Watching in the Week Ahead
- Social Unrest – Market participants will be closely following developments in China/Hong Kong and throughout the United States as hotspots have developed in both regions. The US is fighting a global pandemic, record-high unemployment, and continued health care concerns. Adding in the often-violent demonstrations over the death of George Floyd in over 35 cities throughout the country is yet another layer of complexity to the economic landscape, only months before the Presidential election.
- Economic Reports – The first week of every month is filled with numerous economic reports that include the ISM Manufacturing Index, ISM Non-Manufacturing Index and most importantly, the monthly Nonfarm Payroll report.1 This week, expectations are for the May jobs report to show an unemployment rate of 20%, a hard to imagine level, but predictable given the forced shutdowns and only recent reopening.1
As always, we appreciate your confidence in our team.
Fundamentum Investment Committee
Chad Roope, CFA® Portfolio Manager
Paul Danes, CFA® – Investment Committee
Trevor Forbes – Investment Committee
Matt Dunn, CFA® – Chief Compliance Officer
1-Morningstar Direct 5/18/20
Investment advice offered through Fundamentum LLC a registered investment advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the investment objective of any investment strategy will be attained. Investing involves risk including loss of principal. Past performance is no guarantee of future performance. All indices are unmanaged and may not be invested into directly.