Stocks ended higher for the week and month, helping the S&P 500 jump over 4% in May. For the month, the tech-heavy Nasdaq and Nasdaq 100 continued to lead their peers and closed a few percentage points below their record highs. The S&P 500 closed above its 200 DAM line, which was another bullish event. Meanwhile, the Dow & Russell 2000 continue to underperform on a relative basis, but are getting stronger.
Monday-Wednesday’s Action:
The market was closed on Monday, May 25, in observance of the Memorial Day Holiday. On Tuesday, stocks gapped up after hope spread regarding new potential vaccines and the ongoing slow reopening of the economy. Stocks were mostly higher on Wednesday, after the European Union announced a $2 trillion Coronavirus Response Effort.
Underneath the surface, we saw a lot of rotation going on, as investors sold the recent leaders (stay-at-home and other tech stocks) and bought many beaten down areas of the market such as travel, leisure, and the financials.
Thursday & Friday Action:
Stocks rallied on Thursday, as investors digested the latest round of economic data. On the jobs front, weekly jobless claims jumped, but unemployment slid a little.
Separately, the Commerce Department said Q1 GDP contracted by -5%, missing estimates for a decline of -4.8%. Stocks were quiet on Friday, which was the last trading day for the month. President Trump held a press conference and signaled no changes to the trade deal with China, despite rising tensions.
Market Outlook: Flood The System With Liquidity
Global governments and global central banks stepped in with massive rate cuts and other “aid” packages to help “stimulate” both Main Street and Wall Street. So far, it is working as intended. As long as March’s lows hold, the market will likely move sideways to higher. On the other hand, if March’s lows are breached, then look out below.
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