Overview: Stocks faced a volatile week as performance hinged on progress of coronavirus treatment testing and economic data. The S&P 500 Index recovered to finish down -1.3% for the week. Market sentiment turned positive late in the week on a boost from lower weekly jobless claims and a new round of fiscal stimulus. Bond yields fell on a flight-to-safety trade as crude oil price declines rattled the markets. The 10-year Treasury finished the week at 0.59%. Crude oil witnessed its greatest price fluctuation in over two decades this past week. For the first time in history, the price of the benchmark West Texas Intermediate (WTI) oil closed in negative territory at -$37/barrel. Oil prices quickly rebounded into positive territory, but prices are now down roughly 80% relative to a year ago. Tepid demand for oil and the effects of social distancing are likely to keep oil prices low in the near term and inflation at very low levels. In economic news, initial jobless claims were 4.4 million for the week, bringing the 5-week total to around 26 million. Though still elevated, claims declined for the third consecutive week. The U.S. purchasing managers index (PMI) for April fell to a historical low of 27.4. Weakness was largely driven by a decline in factory activity related to new orders attributed to shelter-in-place public health measures.
This Week: Highlights this week are the Federal Open Market Committee (FOMC) meeting mid-week, where the Fed members are likely to focus on steps to ensure businesses remain afloat amidst a collapse in revenues. The other focus will be U.S. GDP for the first quarter of 2020 (Wednesday), with the consensus estimate for -3.8% growth.
Weekly Returns and Data
Sources: Goldman Sachs Asset Management, JP Morgan Asset Management
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