Stocks rallied strongly over the holiday-shortened week. Sentiment was boosted earlier in the week following data that showed New York, the hardest-hit part of the country, may be reaching a peak in COVID-19 cases. More Federal Reserve (Fed) stimulus helped later in the week. The political clarity now that Joe Biden is the presumptive Democratic presidential nominee may have also helped buoy sentiment.
The S&P 500 Index gained more than 10% for the second week out of the past three and now stands more than 20% off its March 23 low. The Dow Jones Industrial Average and Russell 2000 were best performers among major US indexes we track, while the Nasdaq lagged in a change from recent trends.
Small caps outpaced large caps by roughly 5% on the week, and value stocks outperformed growth by the most since 2009, as some weaker performers rebounded the most. Real estate was the top performing sector followed closely by materials, while the defensive consumer staples sector lagged.
More recessionary economic data didn’t slow the stock market rebound, as an additional 6 million jobless claims were filed for the week ending April 4, and continuing claims, or the number of people collecting benefits, surpassed the previous record set during the 2008–09 financial crisis.
International markets rallied during the week, although both the MSCI EAFE and MSCI Emerging Markets indexes lagged gains seen in the United States through Thursday’s close. Foreign developed markets slightly outpaced emerging markets. European markets will be closed Friday and Monday for the Easter holiday.
Fixed income markets were mixed on the week, as the yield on the 10-year US Treasury rose throughout the week and clipped bond returns. The Barclays Aggregate was little changed, while high-yield corporates and high-yield municipal bonds were the top performers amid modest spread tightening and announced support from the Fed.
Oil prices dropped 18% following last week’s historic more-than-30% rally, as the reported Russia-Saudi Arabia deal failed to live up to hopes for more aggressive production cuts. Gold advanced, pushing toward its highs from early March, while copper prices climbed slightly less. The US dollar fell as market participants embraced risk globally.
This week’s US economic calendar will feature more claims for jobless benefits this Thursday, though likely fewer than the past two weeks. Other data of note for this week includes import and export prices on Tuesday; retail sales and industrial production on Wednesday; housing starts and building permits on Thursday; and the Leading Economic Index on Friday. In addition, the Fed will release its Beige Book summarizing regional economic conditions on Wednesday.
Internationally, investors will digest a flurry of Chinese data this week, including money supply, loan demand, gross domestic product, trade, retail sales, capital investment, and industrial production. In Europe, consumer inflation will be reported on Thursday.
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