Solid Gains for Week and Month – Monday Morning Market Memo – June 1, 2020

Good morning,

After being closed last Monday in observance of Memorial Day, markets opened the week on Tuesday with traders back on the floor of the New York Stock Exchange, and a nice day of gains after promising reports on the development of a coronavirus vaccine. Stock prices were then heading lower Friday on the final day of the trading week over worries about a major escalation in the trade war with China, but recovered by the closing bell as President Trump outlined some measures against China, but avoided ending the phase-one trade deal or taking actions investors would have perceived as being negative for the market. So the market ended the week with solid gains!

For the week the Dow Jones Industrial Average rose 3.8%, the Standard & Poor’s 500 Index gained 3%, and the NASDQ Composite added 1.8%. The stock market also enjoyed nice gains for the month of May, with the benchmark S&P 500 Index advancing 4.5%. The main reason behind the monthly gain was optimism around the reopening of the economy.

Looking to the week ahead the big economic number due out is the May Jobs Report scheduled to be released Friday morning. Consensus expectations are that the U.S. economy lost in the range of 8 million jobs, and for the reading on the unemployment rate to come in at 19% – 20%. These numbers are not typos, but rather the economic cost of the pandemic and shutdown. An important point about this data to keep in mind is that the market is a discounting mechanism and is forward looking. Investors have already priced in these bad numbers for May, and are looking to gauge what the upcoming months will look like!

We’ll also get a handful of notable/interesting earnings reports this week, with companies including Dick’s Sporting Goods, Zoom Video Communications, Campbell Soup, Broadcom, DocuSign, and J.M. Smucker set to report. As always, call us with any questions you may have or if you would like to set up a meeting.

All the best – Southport Station Financial Management, LLC