US Stock Market Weekly Update June 8- June 12, 2020

The US stock market for the week ending on June 12, 2020, had weekly losses for all major stock indexes of more than 2%. The main news during the previous week was the renewed fears of a new coronavirus infection wave and the Federal Reserve monetary policy decision and cautious economic outlook. The Federal Reserve made no surprises and mentioned that it intends to keep interest rates near zero until 2022. Furthermore “The Federal Reserve said on Wednesday that the pandemic could result in permanent economic damage and an extended period of high unemployment.” Source 

These words are not good news for the US economy. The result of these worries on Thursday was a strong selloff for the US stock market. I believe that the recovery for the US economy will not be a V-shaped, but it will have several obstacles and elevated volatility in the months ahead. The Federal Reserve kept the federal funds rate unchanged at the lower and higher bound of 0.0%-0.25% respectively. I do not think that there is a chance of negative rates.

The economic reports released the previous week about the US economy showed a decline in the Core Inflation Rate YoY with a figure of 1.2%, lower than the forecast of 1.3%, and lower than the previous figure of 1.4%. The good news was that the Michigan Consumer Sentiment Preliminary index came in at 78.9, better than the forecast of 75, higher than the previous reading of 72.3. As this index measures the expectations of the consumers about the level of current and future economic conditions, a better than expected figure shows optimism for the US economic recovery.

United States Consumer Sentiment

“The University of Michigan's consumer sentiment for the US rose to 78.9 in June 2020 from 72.3 in the previous month and above market expectations of 75, a preliminary estimate showed. There was an improvement in the outlook for personal finances and more favorable prospects for the national economy due to the reopening of the economy, with more consumers expecting declines in the jobless rate than at any other time in the history of the survey. Still, households did not expect the reestablishment of favorable economic conditions anytime soon. The gauge for current economic conditions increased to 87.8 from 82.3 in May, while the index of consumer expectations rose to 73.1 from 65.9. The median expected inflation rate during the year ahead eased to 3.0 percent from 3.2 percent in the previous month.” - Trading Economics

 

The University of Michigan's consumer sentiment index has risen for the past two consecutive months and seems to have formed a bottom in April 2020.

 

For the week of June 8– June 12, 2020, the major US stock market indexes closed as follows on Friday, June 12, 2020:

• Dow Jones Industrial Average: Close 25605.54, -5.55% for the week, -10.28% Year-to-date

• S&P 500 Index: Close 3041.31, -4.78% for the week, -5.86% Year-to-date

• NASDAQ: Close 9588.81, -2.30% for the week, +6.87%, Year-to-date

• Russell 2000: Close 1387.68, -7.93% for the week, -16.83% Year-to-date

Weekly Stocks Gainers

These are the top 2 stocks with 5 days of consecutive price advances:

1. Ideal Power Inc (NASDAQ:IPWR), Close 5.40, 5-day change +118.62%

2. ADC Therapeutics Sa (NYSE:ADCT), Close 40.32, 5-day change +15.36%

Weekly Stocks Losers

These are the top 3 stocks with 5 days of consecutive price declines:

1. Allied Esports Entertainment Inc (NASDAQ:AESE), Close 2.46, 5-day change -32.97%

2. Sonoma Pharmaceuticals Inc (NASDAQ:SNOA), Close 6.64, 5-day change -29.36%

3. Neurobo Pharmaceuticals Inc. (NASDAQ:NRBO), Close 9.73, 5-day change -29.13%

Economic events for the coming week June 15- June 19, 2020:

Important economic data for this week will be retail sales, the housing starts, and the building permits providing information about the state of the housing market and consumer spending.