Monthly Market Insights | June 2020
Stocks rallied in May, sparked by a supportive Federal Reserve, stories of states re-opening, and reported progress on a COVID-19 vaccine.
The Dow Jones Industrial Average rose 4.26 percent, while the Standard & Poor’s 500 Index picked up 4.53 percent. The NASDAQ Composite led, gaining 6.75 percent.1
Shift in Focus
April’s positive momentum continued into May, as stocks registered healthy gains, and investors looked to future economic hopes rather than current woes.
Further aiding stocks was a better-than-expected jobs report and firming oil prices. Many investors breathed a sigh of relief on the news that U.S. and Chinese negotiators were planning to meet, despite the rising tensions between the two nations.
Stocks rallied, as hopes for a COVID-19 vaccine rose, and the Federal Reserve restated its commitment to do whatever would be necessary to support an economic recovery.
Following Memorial Day weekend, stocks surged, once again, due to rising optimism over economic re-opening, reported declines in new COVID-19 cases, and further news surrounding the development of a potential vaccine.
The majority of industry sectors moved higher in May, with increases in Communication Services (+11.54 percent), Consumer Discretionary (+7.79 percent), Energy (+7.63 percent), Financials (+4.23 percent), Health Care (+2.26 percent), Industrials (+5.93 percent), Materials (+6.33 percent), Real Estate (+2.29 percent), Technology (+9.69 percent), and Utilities (+0.14 percent). A small loss was experienced by Consumer Staples (-0.07 percent).2
What Investors May Be Talking About in June
In some sense, many investors believe a sustained and complete economic recovery may rest on developing a vaccine for COVID-19.
The World Health Organization reports that there are more than 100 vaccine candidates, with 10 currently participating in clinical trials.3
Over the next couple months, results from several of these trials may be released.4,5
Depending on the results, the trials could provide the markets with a sense of optimism. If they prove disappointing, investors may dread the prospect of a prolonged economic recovery. Either way, many investors are cautiously monitoring the situation for further developments.
World markets also posted solid gains on economic recovery hopes, with the MSCI-EAFE Index rising 5.15 percent.6
European markets moved higher, with gains in France, Germany, and the Netherlands. The U.K. slipped 0.88 percent.7
Pacific Rim stocks were mixed, with advances in Australia (+5.37 percent) and Japan (+8.34 percent). Hong Kong dropped 6.83 percent due to China-related tensions. The volatile Merval Index, which tracks the largest companies based in Argentina, jumped 48.04 percent.8
Gross Domestic Product
The economy shrunk at a 5.0-percent annual rate, higher than the initial estimate of 4.8 percent.9
The unemployment rate leaped to 14.7 percent, as nonfarm payrolls fell by 20.5 million. The unemployment rate was the highest seen since the Great Depression.10
Retail sales plunged by 16.4 percent, with every sector lower except for non-store retailers, which are predominately internet-based merchants.11
Industrial production fell 11.2 percent, the largest one-month drop in the index’s 100-plus-year history.12
Housing starts declined 30.2 percent to their lowest level seen since 2015.13
Existing home sales tumbled 17.8 percent in April, the largest one-month drop since July 2010. The supply of homes declined 19.7 percent. Tightening inventories led to a new record high in the median home sales price ($286,800).14
Sales of new homes rose 0.6 percent, a surprise increase amid a consensus forecast of a nearly 22-percent drop.15
Consumer Price Index
The price of consumer goods posted its largest monthly drop since 2008, falling 0.8 percent in April. Excluding the more volatile food and energy sectors, core inflation declined 0.4 percent, the largest monthly drop since 1957.16
Durable Goods Orders
Orders of long-lasting goods dropped 17.2 percent, with demand for transportation equipment falling an eye-catching 47.3 percent.17
Minutes from the last Federal Open Market Committee meeting reaffirmed a commitment to maintaining a zero interest rate policy until inflation reaches the Fed’s two-percent target, and unemployment returns to its pre-COVID-19 level.
The Committee also focused on how they expect to use upcoming meetings to communicate about future policy decisions.
The minutes also reinforced recent comments that the Fed was not inclined to move toward negative rates.18
By the Numbers: Candy
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
Investing involves risks, and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
Any companies mentioned are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance.
The forecasts or forward-looking statements are based on assumptions, may not materialize and are subject to revision without notice.
The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite index is an unmanaged group of securities considered to be representative of the stock market in general. The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies. The Russell 1000 Index is an index that measures the performance of the highest-ranking 1,000 stocks in the Russell 3000 Index, which is comprised of 3,000 of the largest U.S. stocks. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
The Hang Seng Index is a benchmark index for the blue-chip stocks traded on the Hong Kong stock exchange. The KOSPI is an index of all stocks traded on the Korean Stock Exchange. The Nikkei 225 is a stock market index for the Tokyo Stock Exchange. The SENSEX is a stock market index of 30 companies listed on Bombay Stock Exchange. The Jakarta Composite Index is an index of all stocks that are traded on the Indonesia Stock Exchange. The Bovespa Index tracks 50 stocks traded on the Sao Paulo Stock, Mercantile & Futures Exchange. The IPC index measure of companies listed on the Mexican Stock Exchange. The MERVAL tracks the performance of large companies based in Argentina. The ASX 200 index is an index of stocks listed on the Australian Securities Exchange The DAX is a market index consisting of the 30 German companies trading on the Frankfurt Stock Exchange. The CAC 40 is a benchmark for the 40 most significant companies on the French stock market index. The Dow Jones Russia Index measures the performance of leading Russian Global Depositary Receipts (GDRs) that trade on the London Stock Exchange. The FTSE 100 Index is an index of the 100 companies with the highest market capitalization listed on the London Stock Exchange.
Please consult your financial professional for additional information.
Copyright 2020 FMG Suite.
1. The Wall Street Journal, May 31, 2020
2. FactSet Research, May 31, 2020
3. Who.int, May 27, 2020
4. CNBC.com, May 13, 2020
5. NBCnews.com, May 8, 2020
6. MSCI.com, May 31, 2020
7. MSCI.com, May 31, 2020
8. MSCI.com, May 31, 2020
9. The Wall Street Journal, May 28, 2020
10. The Wall Street Journal, May 8, 2020
11. The Wall Street Journal, May 15, 2020
12. The Wall Street Journal, May 15, 2020
13. CNBC.com, May 19, 2020
14. CNBC.com, May 21, 2020
15. CNBC.com, May 26, 2020
16. The Wall Street Journal, May 12, 2020
17. CNBC.com, May 28, 2020
18. The Wall Street Journal, May 20, 2020
19. CandyIndustry.com, 2019
20. TropicalFoods.com, 2019
21. CandyUSA.com, 2019
22. USAToday, September 25, 2019
23. TheWorldBank.org, 2020
24. CandyIndustry.com, 2019
25. GuinnessWorldRecords.com, October 31, 2019