In this week’s recap: Markets rally in reply to positive
comments from Fed Chair Powell and further optimism for economic recovery.
Weekly Economic Update
THE WEEK
ON WALL STREET
Upbeat
comments by the Federal Reserve Chairman and more signs of an economic
turnaround combined to help fuel a powerful rally in the stock market last
week.
The
Dow Jones Industrial Average rose 3.29%, while the Standard & Poor’s 500
advanced 3.20%. The Nasdaq Composite index climbed 3.44% for the week. The MSCI
EAFE index, which tracks developed overseas stock markets, gained 3.87%.1-3
Stocks
Cheer Fed Support
The
markets surged higher to open the week, buoyed by a Sunday night “60 Minutes”
interview with Fed Chair Jerome Powell, who said that the Federal Reserve would
do everything necessary to support economic recovery. Rising oil prices and
more states lifting restrictions added to the overall improving investor
outlook.
After
a day digesting those gains, stocks moved another leg higher on strong earnings
from big retailers and growing optimism over the global economic recovery.
Stocks drifted in the final two days of trading as investors worried about
heightening tensions between the U.S. and China.
Different
Views on the Economic Recovery
Treasury
Secretary Steven Mnuchin and Fed Chair Powell testified last week before the
Senate Banking Committee, providing Senators with two different views of the
nation’s economic outlook.4
Secretary
Mnuchin suggested a wait-and-see approach before moving ahead with additional
fiscal measures. He wants to pause new spending in order to first assess the
impact of the already-approved stimulus program. He believes that the economy
will experience a “V-shaped” recovery.4
Fed
Chair Powell, on the other hand, expressed worries that waiting too long for
additional fiscal measures may hamper the fragile economic recovery. It was the
third time in a week that the Fed Chair suggested more federal spending is
needed to help the economic recovery.4
Final
Thoughts
One
of the challenges of assessing the U.S. economy using certain government
reports, like the consumer price index or the employment report, is that they
are considered “lag indicators.” Lag indicators provide good insight into where
we’ve been, but are less helpful in looking at the current state of economic
activity.
Looking
at some “real-time” data can help investors better assess the here-and-now. For
example, gasoline deliveries are trending higher, consumer confidence appears
to have stabilized, and airlines are seeing more bookings. Even the supply of
toilet paper seems less of a concern these days, with Google searches falling
to near normal levels.5,6
T I P O F
T H E W E E K
Avoid visiting ATMs alone at night, and never count your money at one. If an outside ATM seems lonely, try a well-lit ATM in a 24-hour grocery or drug store instead.
THE WEEK
AHEAD: KEY ECONOMIC DATA
Tuesday: Consumer Confidence. New Home Sales.
Thursday: Jobless Claims. Durable Goods Orders. Gross
Domestic Product (GDP).
Source:
Econoday, May 22, 2020
The Econoday economic calendar lists upcoming U.S. economic data
releases (including key economic indicators), Federal Reserve policy meetings,
and speaking engagements of Federal Reserve officials. The content is developed
from sources believed to be providing accurate information. The forecasts or
forward-looking statements are based on assumptions and may not materialize.
The forecasts also are subject to revision.
THE WEEK
AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: Autozone (AZO).
Wednesday: HP (HPQ), Workday (WDAY), Autodesk (ADSK).
Thursday: Salesforce.com (CRM), Costco (COST), Trip.com
(TCOM), Okta (OKTA), Dollar General (DG), Dell Technologies (DELL), VMware
(VMW).
Source:
Zacks, May 22, 2020
Companies
mentioned are for informational purposes only. It should not be considered a
solicitation for the purchase or sale of the securities. Any investment should
be consistent with your objectives, time frame, and risk tolerance. The return
and principal value of investments will fluctuate as market conditions change.
When sold, investments may be worth more or less than their original cost.
Companies may reschedule when they report earnings without notice.
Q U O T E O F T H E W E E K
“The possible’s slow fuse is
lit by the imagination.”
EMILY DICKINSON
T H E W E E K L Y
R I D D L E
What animal could become
extinct worldwide, yet reappear about a year later?
LAST WEEK’S
RIDDLE: It has keys that open no locks. Yet it lets you enter and create
spaces. What is it?
ANSWER: A
keyboard.
Troy L Thompson, CFP may be
reached at 515-432-5421 or www.thompsonfinancialinc.com
www.thompsonfinancialinc.com
www.thompsonfinancialinc.com
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Troy Thompson, CFP
DBA Thompson Financial and Hanson Asset Strategies
Securities offered through FIRST HEARTLAND CAPITAL, INC.
Member FINRA & SIPC.
Thompson Financial is not affiliated with FIRST HEARTLAND
CAPITAL, INC.
This material was prepared by MarketingPro, Inc., and does
not necessarily represent the views of the presenting party, nor their
affiliates. The information herein has been derived from sources believed to be
accurate. Please note - investing involves risk, and past performance is no
guarantee of future results. Investments will fluctuate and when redeemed may
be worth more or less than when originally invested. This information should
not be construed as investment, tax or legal advice and may not be relied on
for the purpose of avoiding any Federal tax penalty. This is neither a
solicitation nor recommendation to purchase or sell any investment or insurance
product or service, and should not be relied upon as such. All market indices
discussed are unmanaged and are not illustrative of any particular investment.
Indices do not incur management fees, costs and expenses, and cannot be
invested into directly. All economic and performance data is historical and not
indicative of future results. The Dow Jones Industrial Average is a
price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ
Composite Index is a market-weighted index of all over-the-counter common
stocks traded on the National Association of Securities Dealers Automated
Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap
weighted index composed of the common stocks of 500 leading companies in
leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates
two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE
Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific
Exchange). NYSE Group is a leading provider of securities listing, trading and
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(NYMEX) is the world's largest physical commodity futures exchange and the
preeminent trading forum for energy and precious metals, with trading conducted
through two divisions – the NYMEX Division, home to the energy, platinum, and
palladium markets, and the COMEX Division, on which all other metals trade.
Additional risks are associated with international investing, such as currency
fluctuations, political and economic instability and differences in accounting
standards. This material represents an assessment of the market environment at
a specific point in time and is not intended to be a forecast of future events,
or a guarantee of future results. MarketingPro, Inc. is not affiliated with any
person or firm that may be providing this information to you. The publisher is
not engaged in rendering legal, accounting or other professional services. If
assistance is needed, the reader is advised to engage the services of a
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generally considered representative of their respective markets. Individuals
cannot directly invest in unmanaged indexes. Past performance does not
guarantee future results. The return and principal value of investments will
fluctuate as market conditions change. When sold, investments may be worth more
or less than their original cost.
CITATIONS:
1 – The
Wall Street Journal, May 22, 2020
2 – The Wall Street Journal, May 22, 2020
3 – The Wall Street Journal, May 22, 2020
4 – The Wall Street Journal, May 20, 2020
5 – MarketWatch, May 20, 2020
6 – MarketWatch, May 20, 2020
2 – The Wall Street Journal, May 22, 2020
3 – The Wall Street Journal, May 22, 2020
4 – The Wall Street Journal, May 20, 2020
5 – MarketWatch, May 20, 2020
6 – MarketWatch, May 20, 2020
CHART CITATIONS:
The Wall Street Journal, May 22, 2020
The Wall Street Journal, May 22, 2020
Treasury.gov, May 22, 2020
The Wall Street Journal, May 22, 2020
Treasury.gov, May 22, 2020