Market developments and recovery progress for May 4

A perspective from E*TRADE Capital Management, LLC 05/04/20

The latest market and economic developments:

  • After wrapping up their best month in over 30 years, US stocks started May in the red. Equities fell Friday and moved lower in early trading Monday as investors weighed the road to recovery against heightened US–China tensions.
  • Fears of a trade war were reignited over the weekend after President Trump raised concerns about China’s handling of the coronavirus outbreak and floated the idea of using tariffs as a retaliatory measure.1 
  • Jobless claims for the week ending April 25 came in at 3.8 million, pushing the six-week total above 30 million. On a positive note, last week’s reading was the smallest since March 21 and marked a three-week downtrend since claims peaked on March 28.2
  • The eurozone’s preliminary first-quarter GDP shrank by 3.8%, the sharpest contraction in history.3

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

  • The Food and Drug Administration approved the antiviral drug remdesivir as a coronavirus treatment. Remdesivir is now the first clinically tested medication to be deemed a treatment for COVID-19.4
  • Nearly half of the United States will be reopening in some capacity this week, although portions of the West Coast and Northeast remain largely closed.5
  • The number of virus-related deaths in New York and New Jersey dropped on Sunday.6
  • Germany reported the lowest number of new infections and related deaths in more than a month amid a gradual rollback of social-distancing restrictions. Deaths have also declined in the UK, Italy, and Spain.7

Food for thought:

Even as we begin to see the first round of post-coronavirus economic data, uncertainty surrounding the recovery persists. April’s jobs report—due this Friday—is expected to show the highest unemployment rate on record,8 and many economists believe initial GDP readings from the US and Europe are just the tip of the iceberg. 

As we navigate life under new social norms, markets are likely to remain volatile as they digest the fits and starts of an economic reopening, the course of the pandemic, and progress on coronavirus testing and treatment options.

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

  1. Bloomberg, “China Trade Deal Turns From Key Trump Asset to an Albatross,” 5/3/20, https://www.bloomberg.com/news/articles/2020-05-04/china-trade-deal-turns-from-trump-re-election-asset-to-albatross
  2. CNBC, “US weekly jobless claims hit 3.84 million, topping 30 million over the last 6 weeks,” 4/30/20, https://www.cnbc.com/2020/04/30/us-weekly-jobless-claims.html
  3. CNBC, “Euro zone GDP contracts by a record 3.8% in the first quarter,” 4/30/20, https://www.cnbc.com/2020/04/30/euro-zone-gdp-q1-2020.html
  4. Bloomberg, “Gilead Virus Drug Is Cleared for Emergency Use by FDA,” 5/1/20, https://www.bloomberg.com/news/articles/2020-05-01/gilead-drug-is-cleared-for-emergency-use-by-fda-trump-says
  5. The New York Times, “As Businesses Resurface After State Shutdowns, So Does Divisiveness,” 5/1/20, https://www.nytimes.com/2020/05/01/us/coronavirus-states-reopen-tension.html?campaign_id=9&emc=edit_nn_20200503&instance_id=18186&nl=the-morning&regi_id=76161369&segment_id=26501&te=1&user_id=5907a09bfb75dbf35537993d15f86005
  6. The New York Times, “Coronavirus in N.Y.: Latest Updates,” 5/4/20, https://www.nytimes.com/2020/05/04/nyregion/coronavirus-new-york-update.html?action=click&pgtype=Article&state=default&module=styln-coronavirus-national&variant=show&region=MID_MAIN_CONTENT&context=storyline_updates_national
  7. Bloomberg, “Germany’s New Cases, Number Of Deaths at Lowest in Five Weeks,” 5/4/20, https://www.bloomberg.com/news/articles/2020-05-04/germany-s-new-cases-number-of-deaths-at-lowest-in-five-weeks
  8. The Wall Street Journal, “April Jobs Report Likely to Show Highest Unemployment Rate on Record,” 5/3/20, https://www.wsj.com/articles/april-jobs-report-likely-to-show-highest-unemployment-rate-on-record-11588514401

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