Heightened fears over the resurgence of coronavirus cases in the U.S. weighed on risk assets this week. The S&P 500 traded about 1% lower mid-week, while international stocks fared slightly better. Stocks of some of the most economically sensitive companies like airlines, cruises, and casinos have faltered as of late as investors appear to be pricing in the possibility that government officials may re-impose restrictions on economies that are beginning to reopen. In a market update earlier this week, FactSet wrote that there is “nothing specific behind the pullback though there also has not been anything particularly incremental behind the most recent push higher.” This sums up just how difficult it has been trying to put a finger on day to day movements in the equity markets over the last month or so. As we gear up for second quarter earnings in July, data on the economic front has been relatively light, leaving little rhyme or reason behind some of the recent swings in the market. Energy markets have remained volatile, although oil appears to be finding some more stable footing with a barrel of WTI Crude now trading around $38 after seeing the front-month contract go into negative territory just a couple of months earlier. Interest rates rallied this week, with the yield on the 2-year and 10-year Treasury notes trading around 0.18% and 0.68% respectively mid-week.
Source: Bloomberg, FactSet, WSJ Market Data, GSAM