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Markets 2020: Still Dealing in Historic Terms

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Much of the year 2020 deals in historical terms, both to the downside — biggest jump in weekly jobless claims (late March), lowest price per barrel of oil (late April), to name just a couple — and to the upside: we are now witness to the fastest 50-day rally in the S&P 500 of all time. As regular economic data continues to depict a recessionary environment from myriad angles, the stock market is keeping its focus on the future, when these “shelter in place” initiatives that shuttered our economy are a mere blip in the rearview mirror.

Part of this might be the result of the exceedingly crafty and generous maneuvers by the Fed in March and Congress in April, where unprecedented amounts of corporate relief flooded the market and helped investors more easily climb the wall of worry. Stimulus in the EU is following suit, boosting spirits in overseas trading as well.

Further, those dire economic reads we’ve now grown accustomed to seeing have been surprising to the upside: while a May ADP private sector employment headline of -2.76 million jobs is no one’s idea of a good result, it is far, far better than we’ve seen in the previous month. Motor vehicle sales reported yesterday were weak, but also much higher than expectations. Even today, with the ISM Nonmanufacturing index coming in for May at 45.4% was an improvement over consensus.

Thus, we see another big day on the Dow — up 527 points, or slightly above 2% — as well as the Nasdaq +74.5 (+0.78%) and the S&P 500 +42 points (+1.36%). Even the small-cap Russell 2000 gained 33.9 points, up 2.4% at the close. If you knew nothing about what was going on around the U.S. of late — from emergency rooms overwhelmed with COVID-19 patients to city curfews enacted to attempt to bring down heated tensions between civilians and police — you’d be forgiven for thinking we were living the dream right now.

Look at Warner Music Group (WMG), the music streaming service just having begun its public trading existence today, and with its stock rising 19% from Initial Public Offering (IPO). CEO Stephen Cooper has said that the online music streaming business is “still in its early stages” overall.

The biggest economic data of the week — not to mention the most challenging — come out in the next couple days: Thursday morning’s Initial and Continuing Jobless Claims are likely to continue counting more than a million newly unemployed Americans, with totals going back to the start of the economic shutdown now 40+ million, and Friday’s all-encompassing Employment Situation report. Analysts currently expect an Unemployment Rate around 20%.

This would extend the already highest-ever levels of unemployment in the U.S. since this survey began in 1948. Let’s see if market exuberance stares these coming figures down, or whether we finally see it blink.


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