Stocks Tumble for the Day and Week…..
U.S. equities finished solidly lower and further pushed the major indexes into the red on a weekly basis, with tech stocks leading the way after Dow member Microsoft announced it will close its physical stores as a result of the rise in COVID-19 cases. Meanwhile, financials also saw pressure after the Fed’s banking sector stress test results adopted restrictions on dividends and share buybacks. Moreover, Dow component Nike posted disappointing results, consumer spending rebounded less than expected for May, and June consumer sentiment was revised downward. However, Gap surged after announcing a partnership with Kanye West. Treasury yields were lower as bond prices rose, the U.S. dollar was little changed, while crude oil prices were modestly lower and gold was higher. Europe relinquished early gains and finished mostly lower, while markets in Asia were largely higher.
The Dow Jones Industrial Average fell 730 points (2.8%) to 25,016, the S&P 500 Index decreased 75 points (2.4%) to 3,009 and the Nasdaq Composite declined 260 points (2.6%) to 9,757. In heavy volume, 3.1 billion shares were traded on the NYSE and 6.8 billion shares changed hands on the NASDAQ. WTI crude oil inched $0.23 lower to $38.49 per barrel and wholesale gasoline lost $0.04 to $1.16 per gallon. Elsewhere, the Bloomberg gold spot price advanced $7.06 to $1,770.85 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was flat at 97.45. For the week, the markets finished solidly lower, as the DJIA tumbled 3.3%, the S&P 500 lost 2.9%, and the Nasdaq Composite shed 1.9%.
Personal spending misses estimates, June consumer sentiment surprisingly revised lower…..
Personal income fell by 4.2% month-over-month (m/m) in May, versus the Bloomberg forecast of a 6.0% drop, following April’s upwardly-revised 10.8% jump. Personal spending rose 8.2%, below the forecasted 9.3% rise and the prior month’s favorably-adjusted 12.6% tumble. The May savings rate as a percentage of disposable income was 23.2%, down from April’s negatively-adjusted 32.2% surge. The PCE Deflator ticked 0.1% higher m/m, versus expectations of a flat reading and compared to the prior month’s unrevised 0.5% decrease. Compared to last year, the deflator was 0.5% higher, in line with estimates and compared to April’s upwardly-adjusted 0.6% rise. Excluding food and energy, the PCE Core Index also nudged 0.1% higher m/m, compared to expectations of a flat reading and versus April’s unrevised 0.4% decline. The index was 1.0% higher y/y, versus estimates of a 0.9% gain and matching April’s unadjusted increase.
The June final University of Michigan Consumer Sentiment Index was unexpectedly revised lower to 78.1, versus expectations for an upward adjustment to 79.2, from the preliminary 78.9 reading. The negative revision came as both the current conditions and expectations components of the survey were adjusted to lower levels than initially-reported. However, both portions of the survey were higher versus May, along with the overall index, which improved from the prior month’s 72.3 level and April’s record monthly drop to 71.8. The 1-year inflation forecast dipped to 3.0% from May’s 3.2% rate, and the 5-10 year inflation forecast also edged lower to 2.5% from the prior month’s 2.7% pace.
Treasuries were higher on the data and amid the pressure on the stock markets, as the yield on the 2-year note declined 1 basis points (bps) to 0.17%, the yield on the 10-year note decreased 2 bps to 0.65%, and the 30-year bond rate fell 5 bps to 1.37%.
©2020 Charles Schwab & Co., Inc., Member SIPC. All rights reserved.
Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.