Yesterday, New Jersey restaurants got the green light to open their doors for outdoor dining only. This seems positive even though several other states saw an uptick in positive virus cases including Arizona, Texas and Florida 7. Hospitality also took a hit as Norwegian Cruise Lines (NCLH) announces that the majority of their voyages will be suspended until at least October 8.
Investor sentiment turned negative last week, amid an increasing number of COVID-19 cases in states where reopening has been underway as well as a subdued economic forecast from the Federal Reserve.
The Dow Jones Industrial Average dropped 5.55%, while the Standard & Poor’s 500 lost 4.78%. The Nasdaq Composite Index slipped 2.30% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, fell 3.10%.1,2,3
The week started upbeat with “reopening” stocks, e.g., financials, transportation, retailers, travel and leisure, and industrials, leading the way higher. But the momentum was soon lost as stocks turned mixed on Tuesday and Wednesday and then moved decidedly downward, with the S&P 500 losing 5.9% on Thursday.4
Amid a volatile week, big technology companies resumed their market leadership, with the NASDAQ Composite closing above 10,000 for the first time. Stocks pared their losses on Friday, but it wasn’t enough.5
Fed Forecasts Economic Growth and Interest Rates
The Fed also issued its forecasts for 2020-2022, indicating that it saw its benchmark federal funds rate remaining at zero, with inflation at 0.8% for 2020, increasing to 1.6% in 2021, then to 1.7% in 2022. Fed officials also expect the economy to shrink by 6.5% this year, with Gross Domestic Product growing 5% and 3.5% in 2021 and 2022, respectively. Their forecast for unemployment predicts a steady decline over the next 2½ years, from 9.3% by the end of 2020 to 5.5% in 2022.6
THIS WEEK: KEY ECONOMIC DATA
THIS WEEK: COMPANIES REPORTING EARNINGS
Source: Zacks, June 12, 2020
1. The Wall Street Journal, June 12, 2020
2. The Wall Street Journal, June 12, 2020
3. The Wall Street Journal, June 12, 2020
4. The Wall Street Journal, June 11, 2020
5. CNBC, June 12, 2020
6. CNBC, June 10, 2020
7. Reuters, June 14, 2020
8. Barron's, June 16, 2020
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June 16, 2020 Weekly Market Insights: Markets React to Fed Report
June 16, 2020|