Markets “In a Nutshell” for May 26, 2020
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was up 3.29%, the S&P 500 rose 3.20%, the New York Stock Exchange Composite (2,000 stocks) rose 3.51% and the average investors index (Value Line Index) was up 7.81%. Foreign stocks (DJ Global ex U.S.) were up 2.36%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 2 basis points higher at 0.66%. (Data source: Wall Street Journal)
Stocks Rebound From Down Week
Stocks bounced back from what seemed to be a dose of reality in the previous week and rose higher particularly in some of the most affected sectors in the U.S. stock market. Oil and gas companies, which have been the hardest hit sector so far, rose over 6% last week to lead all of the Dow Jones U.S. Industrials sectors. In what could be the most optimistic sign for U.S. stocks, the Russell 2000, a U.S. small-cap index and rough indicator for smaller businesses in the U.S., rose almost 8% in the week. Much of the credit for the big week in stocks has been tied to more state reopening’s across the country and promising vaccine news, particularly biotechnology company Moderna’s successful Phase 1 trial. While stocks have certainly roared back from the lows of mid-March, stocks look poised to continue their volatile streak for the coming months as long as the uncertainty regarding consumer spending remains. (Barron’s)
Renewed Showdown With China
A mounting wave of tensions has been building between the U.S. and China in the past couple of weeks and adds to the long list of potential risks that could derail the stock market and economy. While so far the tensions have been mostly a war of words, it was only a couple of months ago there was optimism following the signing of the “Phase 1” trade deal and that the two countries may have been on a path to settling their economic and political differences. So far the only material action the U.S. has talked about potentially making has been regarding the delisting of Chinese companies on U.S. stock exchanges. The Trump administration has been very vocal about bringing back critical infrastructure jobs back to the U.S., but only time will tell whether they will be successful in doing so. China has continued to publically state that they are committed to following through on their side of the Phase 1 agreement, but it’s still clear that the risks are mounting for a renewed showdown. (Barron’s)
While last week showed some of the more beaten down stocks were beginning to climb higher, the rally in stocks thus far has been driven by the biggest companies in U.S., such as Apple, Amazon and Microsoft. What share of the top 500 stocks’ market value in the U.S. do the top 10 stocks account for?
Have a Great Week!
4. The top 10 stocks in the U.S. account for more than 23% of the top 500 stocks market value. The average over the past 5 years has been about 17%. (Barron’s).