This was a week punctuated by various factors such as the US-China tensions, Trump’s war on social media, the latest jobless claims figures, and much more. But, the reopening of business activities in the country made investors optimistic; resulting in great gains for the market indexes and sectors.
Tuesday, May 26, 2020
The reopening economy sent the Dow Jones up by 529.95 points, 2.2%. It closed at 24,995.11, after reaching 25k intraday and closing a smidge under. It’s the first time since the early part of March that the Dow traded above 25,000. The S&P 500 jumped 1.2% to close at 2,991.77 after doing battle with its own round number of 3000 and falling back in the last few minutes before the close. For most of the session, the index traded higher than 3,000. The optimism wasn’t just because of the economy reopening; it also had to do with hopes of a vaccine for Covid-19 potentially seeing the light of day. The Nasdaq Composite rose 0.2% to close at 9,340.22. The reason for the drop in the final trading hour was a report from Bloomberg news that the United States was considering making its point clear on the Hong Kong issue by imposing sanctions on Chinese officials and firms. This was after the White House announcement on Sunday that the US could potentially impose sanctions on China if the country attempted to exert greater control over Hong Kong by implementing a national security law. It was a day of imagining what a return to a somewhat normal economy might look like, and investors saw optimism and were buying stocks due to benefit from a re-opening of the economy. The travel and leisure sector got a lift as beneficiaries included Carnival ($CCL), United Airlines ($UAL), Southwest Airlines ($LUV), and MGM Resorts ($MGM). Both the airline stocks rose higher than 12%, Carnival jumped 12.6% and MGM Resorts rose 11%. The mood was further buoyed by the consumer confidence measure that hit 86.6 from April’s 85.7 as per data from the Conference Board. This was an unexpected development as a poll conducted by Dow Jones only expected an 82.3 figure. Moreover, crude oil added to the gains it experienced last week. Brent oil was priced at 35.53 USD while WTI oil had a price of 34.35 USD per barrel.
Wednesday, May 27, 2020
Stocks ended on a positive note on the second trading day of the week, despite a great deal of volatility during much of the day. Airlines and travel stocks led the way as all large-cap indexes extended their Tuesday gains from Tuesday along with the Russell 2000. The US equities closed near their session highs. Dow Jones gained over 550 points and had a close higher than 25,000, at 25,548.27 which brought it to the closing levels of early March. The dow jones had a standout day rising by almost 4.5%!. Banking and retail stocks were strong, and this caused the S&P 500 to close with a 1.5% rise at 3,036.13. The Nasdaq Composite too closed higher by 0.8% despite being in negative territory for a significant part of the day; ending the day at 9,412.36. Meanwhile, with all the renewed optimism, stocks that had been actually benefitting from the lockdowns took a breather. Profit-taking was seen in Shopify and Zoom Video, each of which dropped over 5%, after incredible runs. Netflix and Amazon dropped 2.3% and 1.9% respectively. More dramatic was Teladoc Health-which benefitted from remote health services, which dropped 7.8% in trade. For the year, though, these stocks have risen by 25.1% at least. Bank stocks received a significant boost as a result of the renewed economic activity. Two major banking ETFs, the Regional Banking ETF ($KRE) and SPDR S&P Bank ETF ($KBE) were up by around 5%. For the week, both the ETFs were above 13%. Wells Fargo ($WFC), Truist ($TFC), Regions ($RF), Citigroup ($C) and Citizens Financial ($CFG) were up by 14% at least for the week. Oil losses extended following the findings of a Bloomberg report that indicated a rise in US stockpiles. WTI oil closed at 32.81 USD while Brent closed at 32.73 USD.
Thursday, May 28, 2020
Thursday saw the bullishness continue, In just four days Dow Jones experienced a 1000-point boost to its aggregate increase, and investors extended the rally. In the first half-hour of trading, the blue chips had risen by over 100 points. Heading into the final trading hour, the market held on to much of the day's gains. While the number of jobless claims continued to rise, with the total number being 41 million, the latest 2.1 million growth figure was the lowest total experienced in weeks. Continuing claims also dropped by nearly 4 million adding to the optimistic mood in the market. President Trump’s public war on the major social networks Facebook ($FB) and Twitter ($TWTR) dominated the headlines on Wednesday and Thursday. Trump was expected to give an announcement regarding an order that would target social media companies. In premarket trading, Twitter shares were down 3% while Facebook was down 1.5%. These losses added to what these stocks lost on Wednesday when this matter first came to light. China kicked up a political controversy by approving a proposal for imposing the feared national security law for Hong Kong, which would negatively affect the financial future of the city that had been enjoying semi-autonomous status. The United States had threatened action if such a move went through. The Nasdaq closed at 9,368.99, while the S&P 500 and Dow Jones closed at 3,029.73 and 25,400.64 respectively. WTI oil was priced at 33.71 USD while Brent closed at 35.29 USD.
Friday, May 29, 2020
In the final trading hour on the final trading day of the week, the S&P 500 rose to eventually close at 3,044.31. The Dow Jones had its best-ever week since the early part of April, closing the day’s trading at 25,383.11. The major averages all had a great week. Nasdaq experienced a gain of 1.29%, which was its 4th positive day in 5 trading days; closing at 9,489.87. Since May 20, this has been the best day for the Nasdaq. The index gained 1.77% as it enjoyed its third week of gains in just four weeks. The month of May was also the second consecutive month of gains for the index. This month saw the Nasdaq gaining 6.75%. The index is also 43.1% higher than its 52-week low, which is at 6,631.42. The tech sector continued its strength and gained 6.83% for the month, Indeed, all sectors ended the month higher and with all sectors gaining this week as well. Financials led the way, with a 6.58% gain that was also the sector’s best since early in April. The healthcare sector gained 1.27% while tech rose by 1.18%. WTI oil closed at 35.49, while Brent was priced at 37.84 USD. Friday’s trading session was a bit volatile and ended the last trading day of the month and week at 3,044.31. The Dow ultimately ended the session down 0.07%, or 17 points, after early gains. Nasdaq performed well, gaining 1.3%.
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