6/17/20 Market Notes
Equity markets shrugged off the continuing surge in virus cases on Tuesday with the S&P 500 Index adding 58 points (1.9%) to 3,125, the Dow increasing 527 points (2.0%) to 26,290, and the Nasdaq Composite index rising by 170 points (1.8%) to 9,896. A surprising rebound in retail sales and an unexpected increase in homebuilder confidence coupled with positive indicators overseas stated the session on the right foot. Fed Chair, Jerome Powell’s’ reiterated that the unprecedented accommodative response by the Federal Reserve would continue “as long as necessary” kept momentum going. News that an inexpensive anti-inflammatory drug is effective at helping save the lives of victims of virus induced respiratory distress further buoyed sentiment. While retail sales data surprised strongly to the upside (17.7% increase vs 8.4% consensus), manufacturing data disappointed. Industrial Production, Capacity Utilization, and Business Inventories all improved in May but data came in below expectations. Increasing virus case counts in Beijing prompted the closing of schools and cancellation of flights; and rates of infection continued to grow in Arizona, Texas and Florida. But a 'don't fight the Fed' mantra likely muted the impact of these headlines on the broader market. Energy, Health Care and Information Technology were among the best performing S&P sectors while Financials, Communication Services and Utilities gained the least. The health of the housing industry will remain in focus on Wednesday with the release of building permits, housing starts, and mortgage data this morning. Fed Chair Powell concludes his congressional testimony; and weekly crude inventories are due to be released. Tomorrow’s Initial Claim’s report could be a key focus after last weeks report helped contribute to the recent sell-off. Asian and European markets rallied on positive sentiment, and US equity futures are pointing higher this morning.
Disclosures: This market commentary is written by the 1879 Advisors® and represents the views of 1879 Advisors®. This commentary is not investment advice and should not be used as a basis to make investment decisions. Please consult with your registered investment advisor before making any investment decisions.