The Week On Wall Street
Stocks drifted lower last week, weighed down by Federal Reserve Chairman Jerome Powell’s unsettling comments on the economy and signs of renewed tensions with China.
The Dow Jones Industrial Average fell 2.65%, while the Standard & Poor’s 500 retreated 2.26%. The Nasdaq Composite Index slipped 1.17% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, slid 3.66%.1,2,3
Stocks Pull Back
Stocks moved lower throughout most of last week on worries that the emerging economic reopening might accelerate the spread of COVID-19. Comments by Fed Chair Powell added to the downside pressure when he expressed concern about the path ahead for the U.S. economy.
The stock market managed to find some firmer footing, posting a strong gain on Thursday. Stocks rallied again on Friday, overcoming headlines that suggested a souring relationship with China and a report that showed U.S. retail sales had dropped 16.4% in April.4
Fed Chair Powell spoke last Wednesday and painted a somber economic outlook, remarking that “the path ahead is highly uncertain and subject to significant downside risks.” He urged the White House and Congress to pass additional financial relief to help the economic recovery, adding that there was no plan on the Fed’s part to cut the federal funds rate to below zero.5
Powell also referenced internal Fed research that found those least able to weather the current economic environment were most impacted, with nearly 40% of households making less than $40,000 per year having lost a job in March.6
The Week Ahead: Key Economic Data
- Tuesday: Housing Starts.
- Wednesday: FOMC (Federal Open Market Committee) Minutes.
- Thursday: Jobless Claims. Existing Home Sales. Index of Leading Economic Indicators.
The Week Ahead: Companies Reporting Earnings
- Monday: Baidu (BIDU).
- Tuesday: Walmart (WMT), Home Depot (HD).
- Wednesday: Kohls (KSS), Target (TGT), Lowes Cos. (LOW), Expedia Group (EXPE).
- Thursday: Nvidia (NVDA), TJX Cos. (TJX), Ross Stores (ROST), Intuit (INTU).
- Friday: Deere (DE), Alibaba Group (BABA), Pinduoduo (PDD).
|Market Index||Close May 15||Week %||YTD %|
|Treasury||Close May 15||Week %||YTD %|
|10 Year Note||0.64%||-0.05||-1.28|
Sources: wsj.com, treasury.gov – 5/15/2020
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. Weekly and year-to-date market index returns are expressed as percentages. 10-year Treasury note yield = projected return on investment, expressed as a percentage, on the U.S. government’s 10-year bond. Weekly and year-to-date 10-year Treasury note yield differences are expressed in basis points.