Market Volatility – Monday Morning Market Memo – May 18, 2020

Market Volatility – Monday Morning Market Memo – May 18, 2020

Good morning,

As it so often does, the stock market rode the roller coaster last week. Powering the ups and downs of the market were things such as optimism around the economy starting to reopen, pessimism around the outcome of the reopening, cautionary remarks by Fed Chair Jerome Powell, a rally in oil prices, increased tensions with China, and the largest decline in retail sales on record, with April Retail Sales falling a whopping 16.4% (due of course to the pandemic which resulted in much of the economy being shut down).

After the market digested that full plate of news, stocks closed lower last week. For the week – the Dow Jones Industrial Average fell 2.7%, the NASDAQ Composite dropped 1.2%, and the Standard & Poor’s 500 Index lost 2.3%. Looking to the week ahead, things are off to a good start with the Dow currently up over 800 points or about 3.5%, on positive reports regarding a potential coronavirus vaccine (not a bad way to start a Monday morning)!

Throughout this week we have the last sizable batch of earnings reports streaming in, with a concentration in reports from retailers as Advanced Auto Parts, Home Depot, Foot Locker, Lowe’s, Walmart, Target, TJX Companies, and Lowe’s are all scheduled to report results. Away from retailers, we will be tracking reports from Baidu, Expedia Group, Palo Alto Networks, Deere, and NVIDIA. Looking at this earnings season in aggregate….

So far, 90% of the companies in the Standard & Poor’s 500 Index have reported earnings for the first quarter of the year – of these companies, 65% have reported actual EPS (Earnings Per Share) above the mean estimate, which is below the five-year average of 73% – and the estimated earnings decline is 13.8%, which would be the largest earnings decline since 2009, according to data from FactSet. Remember, the market is forward-looking, and is currently focusing not on the last quarter but on how things may look in the future if the economy reopens effectively.

As always, don’t hesitate to contact us with any questions or concerns you may have, or if you would like to set up a meeting.

All the best – Southport Station Financial Management, LLC