Todd’s Take on the Market
Despite all of the bad news out there, stocks continue to push higher. The Dow rose 2.67%, the S&P 500 3.67% and the NASDAQ a whopping 6.05%.
We can go on discussing the ongoing tug-of-war between market momentum (stocks) and deteriorating fundamentals (economy), but it is fruitless, stocks keep going up (think “get out of jail free”).
Let me go through some of the numbers I collected this week:
- UK auto sales plummet to the lowest level since 1946—that’s right after WWII, I didn’t even know they had cars back then.
- Markit US Composite PMI (Manufacturing & Services) are at a record low.
- 169 million people filed initial jobless claims for the week ended May 2. 33.476 million people have filed in the seven weeks ended May. Continuing claims up 26% or 4.7mm WoW to 22.65mm, so much for PPP disbursals pulling people back.
Need any more evidence that the stock market is not the economy?
- US April Nonfarm Payrolls -20.5mm vs -22mm expected.
- Two months ago, we had the lowest unemployment rate in 50 years.
- Today, we have the highest unemployment rate in 80 years.
- And, as of this writing, the NASDAQ is only about 5% off the all-time high—makes sense—NO!
While the data continues to point to worsening conditions for the economy, stocks keep pushing higher.
On the Oil side of things, the Saudis and OPEC continue to cut production (mainly because they have nowhere to put it) and you will notice an increase at the pumps.
On the yield side of things, yields fell last week to 0.64% on the 10-year Treasury and then spiked to 0.75% and then fell back to 0.65%—the bond market doesn’t know which way things are going either.
There are a lot of moving parts so I would suggest you stay tuned and we will keep you posted.
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC
