6/8/20 Market Notes
US equities surged on Friday posting the best week since 2011. The 4.9% weekly gain was fueled by a surprisingly positive unemployment report, supporting the case for a V-shaped recovery, and driving commodity and risk assets higher. The S&P 500 gained 82 points on Friday (+2.6%) to finish at 3,194 and nearly erasing its losses for the year. The Dow rallied 829 points (+3.2%), and Nasdaq added 198 points (+2.1%) to finish at 9814;up over 9% year-to-date and just a fraction shy of its February 19th all-time high. Treasury prices fell pushing yields higher, especially at the mid to long end of the curve. The dollar was flat, gold prices fell, and crude prices gained after agreement among OPEC+ on extant supply constraints. The exceptional non-farms payroll report has many investors questioning government support for further stimulus and looking to Wednesday’s FOMC meeting (where rates are expected to remain unchanged) for forward guidance. US equity index futures are higher this morning after overnight gains in Asia and Europe, indicating that the recent rally is poised to continue today and potentially pushing the S&P 500 into positive territory for the year.
Equity markets continue to discount threats to the economic recovery. Valuations are pricing in a strong rebound in earnings later this year; and predicting that the recovery will more than offset growing China tensions, domestic unrest, or a resurgence of the coronavirus. While this is a plausible outcome, any meaningful setback could have a considerable impact on valuations and lead to higher volatility. We encourage investors to consult with their advisors to ensure that asset allocations are properly aligned with long term objectives.
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.