Market developments and recovery progress for May 15
The latest market and economic developments:
- After rallying Thursday, US stocks fell early Friday as the S&P 500® and Dow Jones Industrial Average tracked toward their worst week since late March.
- Retail sales fell by a record 16.4% in April according to numbers from the Commerce Department, nearly double the 8.3% decline in March.1
- An additional three million Americans filed for unemployment last week, bringing the pandemic’s total to nearly 36.5 million. While the numbers are still alarmingly high, they have consistently declined for six-straight weeks.2
- The International Energy Agency (IEA) forecast an improving global oil outlook for the year, citing easing lockdowns and supply cuts from the major oil-producing countries. Also, data from the Energy Information Administration on Wednesday showed US crude oil stockpiles shrank for the first time in 15 weeks.3
- The latest GDP reading from Germany showed Europe’s largest economy is in a recession. The German economy shrank by 2.2% in Q1, the steepest contraction since 2008, and the second-consecutive quarter of negative economic growth.1
And here are the most recent updates on our path toward recovery:
- Two more regions in New York will begin reopening on Friday, adding to the three areas Governor Andrew Cuomo initially declared ready at the start of the week. The expansion means five of the state’s 10 regions will be allowed to resume construction, manufacturing, and curbside retail business activity.4
- Detroit automakers will restart factories on May 18 after shuttering production in March. The Big Three—Ford, General Motors, and Fiat Chrysler—will reopen their US plants with new safety equipment and enhanced protocols. The auto industry employs nearly one million Americans,5 and its success will be critical in determining how soon other industries may be able to ramp up business.
- Slovenia formally announced the end of its coronavirus epidemic,6 while virus numbers elsewhere in Europe continue to track in the right direction. Coronavirus hospitalizations in Portugal have fallen 17% since the country began loosening restrictions on May 4, and Denmark recorded its first day without new virus-related deaths since March.7
Food for thought:
Friday’s retail sales number capped off a heavy week of economic data and is likely a preview of what’s to come when several major retail names report earnings next week. Popular retailers have been filing for bankruptcy amid debt concerns, furloughing workers, and shuttering stores.
While the impact of the strictest stay-at-home measures is still rippling through employment and sales data, there were some reminders this week that the longer-term outlook remains hopeful. Consumer sentiment rose in May amid massive stimulus from the US government and, as the Federal Reserve Chairman remarked on Wednesday, a stronger economic recovery could be possible with more support from Congress.8
Bottom line: Stay the course and keep investing decisions focused on individual timelines, long-term goals, and risk tolerance.
- The New York Times, “U.S. Retail Sales Plunge 16 Percent: Live Updates,” 5/15/20, https://www.nytimes.com/2020/05/15/business/stock-market-today-coronavirus.html
- CNBC, “Weekly jobless claims total 2.981 million, bringing coronavirus tally to 36.5 million,” 5/14/20, https://www.cnbc.com/2020/05/14/weekly-jobless-claims.html
- Reuters, “Oil prices rise on dip in U.S. crude stockpiles and IEA data,” 5/14/20, https://uk.reuters.com/article/uk-global-oil/oil-prices-inch-higher-on-us-stockpile-drop-but-bleak-outlook-caps-gains-idUKKBN22Q02Z
- The New York Times, “Five of New York’s 10 Regions Can Begin to Reopen on Friday,” 5/14/20, https://www.nytimes.com/2020/05/14/nyregion/coronavirus-ny-nj-news.html
- Reuters, “All eyes on Detroit as automakers ready slow, careful reopening of plants,” 5/13/20, https://www.reuters.com/article/us-health-coronavirus-ford-plants/all-eyes-on-detroit-as-automakers-ready-slow-careful-reopening-of-plants-idUSKBN22P3A8
- Bloomberg, “Slovenia Opens Borders, Declares Its Covid-19 Epidemic Over,” 5/15/20, https://www.bloomberg.com/news/articles/2020-05-15/slovenia-opens-borders-declares-its-covid-19-epidemic-over
- Bloomberg, “Italy to Open Travel; Second-Wave Concern in Asia: Virus Update,” 5/14/20, https://www.bloomberg.com/news/articles/2020-05-14/deaths-exceed-300-000-japan-eases-emergency-steps-virus-update
- CNBC, “Powell says more policy help may be needed to pull the US out of economic downturn,” 5/13/20, https://www.cnbc.com/2020/05/13/feds-powell-says-more-policy-help-may-be-needed-to-pull-the-us-out-of-economic-downturn.html