In the stock market there are always reasons to be Bullish (belief prices will rise) or Bearish (belief prices will fall). The bifurcated action last week portrayed and highlighted some of the strongest current reasons to be either bullish or bearish.
Stocks kicked off trading last week with steep losses on Monday morning, but reversed direction and closed the day in positive territory after the Federal Reserve announced it would buy individual corporate bonds (Fed stimulus). Tuesday’s action saw larger gains (with the Dow Jones Industrial Average rising over 500 points) amidst reports of progress on a coronavirus therapeutic drug and better-than-expected retail sales. Retail Sales in the U.S. surged by a record 17.7% in May, versus market expectations for a gain of 8.5 percent.
The Dow then finished lower Wednesday, Thursday, and Friday on concerns over increases in the number of coronavirus cases. One of the markets biggest worries is if the pace of economic reopening slows or reverses, and the impact that would have on the economy. Headlines such as Apple reclosing some stores and cruise lines delaying the restart of certain voyages, weighed on overall market and economic sentiment. When it was all said and done for the week as a whole, the Bulls came out on top as the major market averages ended with decent gains.
The Dow Jones Industrial Average rose 1% and the Standard & Poor’s 500 Index gained 1.9%, while the tech heavy NASDAQ Composite outperformed, posting a 3.7% weekly gain. The themes that moved the market last week will likely remain with us, and be a large factor determining market direction for some time. Federal Reserve stimulus, the health and speed of the economic rebound, the status of the pandemic and the outlook for treatments/vaccines will all remain among investor focal points. As the course of the coronavirus remains unknowable, investors can expect the roller coaster ride to continue. One thing that is for certain, it won’t be boring!
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All the best – Southport Station Financial Management, LLC