Market developments and recovery progress for May 29

A perspective from E*TRADE Capital Management, LLC 05/29/20

The latest market and economic developments:

  • Stocks snapped a three-day winning streak on Thursday amid growing tensions between the US and China. US equities were lower in early trading Friday but remained on track for an up week and an up month.
  • The latest jobs data showed the number of people filing to extend their existing unemployment benefits dropped by 4 million, an indication that the total number of unemployed shrank. However, another 2.1 million people filed new unemployment claims for the week ending May 23.1
  • Consumer spending plunged 13.6% in April, the second-straight monthly decline and the worst drop on record.
  • President Trump will hold a press conference today, May 29, that is expected to address ongoing tensions with China. On Wednesday, the US announced it no longer considers Hong Kong autonomous after China took steps to impose national security laws on the city.3

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

  • On Thursday, New York City reported its lowest daily positive test rate since the coronavirus outbreak began in March. Mayor Bill de Blasio said he expects the city to begin the first phase of reopening in the next few weeks, allowing between 200,000 and 400,000 people to return to work.4
  • Starting May 31, fans in Texas will be allowed to attend professional sporting events at outdoor stadiums. Governor Greg Abbott announced the new order on Thursday, which limits attendance to 25% of normal capacity.5
  • Disney World announced the reopening of its Orlando theme park on July 11, nearly four months after closing because of the coronavirus pandemic. The company has furloughed more than 100,000 workers, many of whom are park employees.6

Food for thought:

For the first time since the coronavirus crisis began, jobs data indicated Americans may actually be getting back to work. Thursday’s numbers showed that continuing claims dropped by nearly four million, an encouraging sign businesses are bringing back employees as lockdowns ease. While new claims continue to come in by the millions, they have steadily declined for eight straight weeks.

May’s jobs report is due June 5 and is widely expected to show an unemployment rate upwards of 20%. Given the market’s forward-looking posture and its apparent optimism amid the country’s reopening, the report may already be priced into the market, meaning it would not significantly move indexes in either direction—unless it misses estimates by a wide margin. Instead, market watchers may be keeping tabs on the latest developments in the US-China saga, an all-too-familiar source of market turmoil.

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

  1. CNBC, “Jobs data shows millions went back to work but unemployment rate for May is still expected at 20,” 5/28/20, https://www.cnbc.com/2020/05/28/jobs-data-shows-millions-went-back-to-work-but-unemployment-rate-for-may-is-still-expected-at-20percent.html
  2. Bureau of Economic Analysis, “Personal Income and Outlays: April 2020,” 5/29/20, https://www.bea.gov/news/2020/personal-income-and-outlays-april-2020
  3. The Wall Street Journal, “U.S. Officially Declares That Hong Kong Is No Longer Autonomous,” 5/27/20, https://www.wsj.com/articles/u-s-officially-declares-that-hong-kong-is-no-longer-autonomous-11590596133
  4. CNBC, “Coronavirus live updates: San Francisco releases reopening timeline, Boston Marathon canceled,” 5/28/20, https://www.cnbc.com/2020/05/28/coronavirus-live-updates.html
  5. ESPN, “Texas Governor Allows Fans to Attend Outdoor Pro Sporting Events at 25% Capacity,” 5/28/20, https://www.si.com/sports-illustrated/2020/05/28/texas-governor-fans-attend-professional-sports-outdoors
  6. The Wall Street Journal, “Disney World to Reopen Gradually Starting July 11,” 5/28/20, https://www.wsj.com/articles/disney-world-to-reopen-gradually-starting-july-11-11590596657

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