Market developments and recovery progress for May 27

A perspective from E*TRADE Capital Management, LLC 05/27/20

The latest market and economic developments:

  • The market started the holiday-shortened week on strong footing, with the S&P 500® and Dow gaining 1.2% and 2.2%, respectively, on Tuesday. Stocks continued their rally early Wednesday but later erased gains as tech shares slid. 
  • US oil is tracking toward its best month on record, with West Texas Intermediate (WTI) futures prices—the domestic oil benchmark—rallying around 70% in May. Despite the turnaround, prices are still nearly 50% below their January high of $65.65.1
  • The Conference Board’s consumer confidence gauge unexpectedly rose to 86.6 in May, up from 85.7 in April, as easing lockdowns helped improve the short-term outlook.2
  • Homebuilder stocks got a boost after Census Bureau data showed an unexpected increase in new home sales in April. Sales were up 0.6% compared to March.3

And here are the most recent updates on our path toward recovery:

  • Biotech company Novavax announced it started the first phase of human trials for its potential coronavirus vaccine and expects to have initial results in July.4 According to the World Health Organization, there are currently 120 experimental vaccines in development, including 10 in the clinical evaluation stage.5
  • On Tuesday, new coronavirus cases in the US rose by the slowest pace since March, while New York recorded its lowest counts of related hospitalizations and deaths since the outbreak began. Governor Andrew Cuomo said his administration would focus efforts on reopening New York City, the only region in the state that has not begun easing lockdown measures.6
  • New Jersey is allowing professional sports teams to resume training and competition. This would include New York’s Jets and Giants, both of which practice and play in New Jersey.6 In more reopening news, the National Basketball Association announced it’s considering resuming games at Disney’s Orlando sports complex in July.7

Food for thought:

With just three days left in May, the major US stock indexes are on track for a second-straight month of gains as investors hope the worst of the lockdown era is in the rear view. While the economic slide is likely far from over, recent data suggests it could be slowing: The contraction in business activity eased this month and new unemployment claims have trended downward for the past eight weeks.

Although the S&P 500 and Dow are still down roughly 7.5% and 12%, respectively, for the year, both have retraced a significant portion of their February-March losses. Notably, on Tuesday, the S&P crossed the psychologically important 3,000 threshold for the first time since early March. Market watchers will be looking to see if the index can hold that level for a potential sign of a longer-term bullish trend. In the meantime, there is a lot of game left to play.  

Bottom line: Stay the course and keep investing decisions focused on individual timelines, long-term goals, and risk tolerance.

  1. CNBC, “Oil is on track for its best month ever after rebound, but traders say it’s ‘not out of the woods’,” 5/25/20, https://www.cnbc.com/2020/05/25/oil-is-on-track-for-its-best-month-ever-after-rebound-but-traders-say-its-not-out-of-the-woods.html
  2. CNBC, “Consumer confidence rises unexpectedly in May as economy reopens,” 5/26/20, https://www.cnbc.com/2020/05/26/consumer-confidence-may-2020.html
  3. Bloomberg, “U.S. Homebuilders Defy Expectations With Gain in New-Home Sales,” 5/26/20, https://www.bloomberg.com/news/articles/2020-05-26/u-s-new-home-sales-unexpectedly-rose-in-april-to-623-000-rate
  4. The Wall Street Journal, “Novavax Coronavirus Vaccine Begins Human Testing,” 5/26/20, https://www.wsj.com/articles/novavax-coronavirus-vaccine-begins-human-testing-11590438240?mod=djem10point
  5. World Health Organization, DRAFT landscape of COVID-19 candidate vaccines, 5/27/20, https://www.who.int/who-documents-detail/draft-landscape-of-covid-19-candidate-vaccines
  6. Bloomberg, “U.S. Cases Rise 1.1%, Slowest Increase Since March: Virus Update,” 5/26/20, https://www.bloomberg.com/news/articles/2020-05-25/u-s-deaths-near-100-000-novavax-testing-vaccine-virus-update?cmpid=BBD052620_CUS&utm_medium=email&utm_source=newsletter&utm_term=200526&utm_campaign=closeamericas
  7. ESPN, “NBA in talks to resume play at Disney's ESPN Wide World of Sports Complex,” 5/23/20, https://www.espn.com/nba/story/_/id/29213517/nba-talks-resume-play-disney-espn-wide-world-sports-complex

Click here to log on to your account or learn more about E*TRADE's trading platforms, or follow the Company on Twitter, @ETRADE, for useful trading and investing insights.

What to read next...

05/22/20
US stocks were lower early Friday but remained on track to wrap a week of solid gains, despite millions more unemployment claims and mounting tensions with China.

05/20/20
Stocks pulled back Tuesday after a massive Monday rally, but the major US indexes were higher early Wednesday as more states move to reopen.

05/18/20
Despite an end-of-week rally, the S&P 500 lost more than 2% last week, but stocks surged early Monday following reports of positive developments on a coronavirus vaccine and generally bullish sentiment from Federal Reserve Chairman Jerome Powell over the weekend.

Looking to expand your financial knowledge?