Markets fought back gamely on Friday, with major indexes rising between 1-2%, following a bleak Thursday which shed plenty of valuation on fears re-emerging about a rise in coronavirus cases and trade with China. We’re back on the down-leg again early Monday: the Dow is currently down more than 600 points, the Nasdaq -130 and the S&P 500 is off by around 60 points.
The smoke has not yet cleared on the havoc wrought by the national — and international — shutdowns in reaction to the COVID-19 pandemic spreading, and there is already talk of a “second wave” threatening to rattle the economy again. Those smaller businesses especially that have been reliant on the Paycheck Protection Program (PPP) may yet shutter for good if they are unable to reopen, or do so on a wide-enough scale. In fact, the smoke still hasn’t cleared regarding which received financial assistance and which haven’t.
As far as the disease itself, COVID-19 infections worldwide are about to cross 8 million, with 426K+ fatalities resulting. Here in the U.S. — still the worst-hit of all countries reporting reliable data — we’re around 2.1 million confirmed cases and approaching 116K deaths. More concerning are the spikes we’ve seen in states which decided to reopen sooner than others, like Texas, Arizona and Oregon, which threaten to push hospital ICUs past their breaking point, especially in regions with scant supply.
This week, we will see lots of economic data tracing the initial green shoots of the reopening, including Retail Sales, Industrial Production, Housing Starts, Philly Fed and, of course, Initial Jobless Claims. Most will be accounts from the month of May, though some register June figures.
One such read for June is out this morning: the Empire State index. In what was supposed to be another big double-digit drop (estimates had been for around -35 points), this month’s headline was barely negative: -0.2. This is a marked improvement over May’s -48.5 and April’s abysmal -78.2. This impressive bounce-back mirrors the state of New York’s overall rebound following the worst outbreak of COVID-19 in the country.
With the markets selling again, it would appear a less-than-perfect reopening is at last being priced in. This does not mean we won’t successfully rebound back to where we once were, but it is no longer expected to be quite so near-term. As it happens this morning, market indexes look to open by giving up all gains made in the first half of June.