Stocks traded marginally higher mid-week as more U.S. states and other major global economies began to ease coronavirus measures. A swift re-opening of the global economy would almost certainly be viewed as positive from the market’s perspective, however, the ongoing threat of a second wave of infections lingers. In the energy markets, oil rallied more than 15% this week with a barrel of WTI crude trading around $23 on Wednesday as optimism surrounding the potential “bottoming out” of oil demand helped fuel the rally. Earnings reports continue to hit the market, with more than 60% of the companies in the S&P 500 having reported first quarter results. Using a combination of actual and estimated results, analysts at FactSet project earnings to decline by -13.7% in the first quarter of 2020, slightly better than estimate of -16.1% just a week earlier. The revision higher can be largely attributed to better than expected earnings in the Energy, Technology, and Health Care sectors. On the labor front, ADP reports private sector employment fell by more than 20 million in April, roughly in line with consensus estimates. Investors will be looking forward to Friday’s more closely followed non-farm payrolls number for a read on the employment situation in the United States. The ISM non-manufacturing index fell to 41.8 in April reflecting significant declines in business activity, new orders, and employment (any number above/below 50 represents an expansion/contraction in the non-manufacturing/services sector). Interest rates crept higher this week, with the yield on the 2-year and 10-year Treasury notes trading around 0.18% and 0.72% respectively mid-week.
Source: Bloomberg, FactSet, WSJ Market Data, GSAM