Stocks indices ended a volatile week with gains with the Nasdaq index showing the largest gains. The week started with a strong rally, but fears of reopening causing a resurgence of infections kept a lid on stocks the rest of the week. By weeks end, this became more apparent with Apple announcing it is reclosing stores in Florida, Arizona and the Carolinas. Also, major cruise lines extended their suspension of sailing from U.S. ports until September 15th.
Fed chairman Powell testified virtually to the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. He said “Until the public is confident that the disease is contained, a full recovery is unlikely,” and warned Congress not to stop federal relief for households and small businesses too soon.
The Bank of Japan met this week and made no changes to its ultra-easy monetary policy. Also, the Bank of England met and is reducing, nearly 50% the pace of bond buying going forward.
The average 30-year mortgage rate fell to a record low 3.13% Treasury yields were mixed with the 30-year bond ending at 1.465% and the 10-Year note at 0.697%. Crude oil rose to $39.29 a barrel and natural gas fell to $1.671 per MMBTUs. The U.S. dollar index ended the week higher and gold prices rose to $1754.50 an ounce.
In the economic numbers this week:
- China reported
- Unemployment fell from 6.0% to 5.9% in May, although many economists questioned that accuracy of that number.
- Industrial production rose 4.4% in May from a year earlier.
- Retail sales fell 2.8% in May from a year earlier, much improved from April’s 7.5% year over year decrease.
- Auto sales rose 3.5% YOY.
- Infrastructure-construction for the January through May period fell 6.3% from the prior year.
- The Commerce Department reported
- Retail sales rose a record 17.7% in May, the biggest jump in records going back to 1922. This follows April’s record decline, revised to 14.7%. Year to date retail sales are down about 7.6% from last year. The biggest increase in May was for apparel as people returned to stores in parts of the country.
- U.S. corporations repatriated $124BN on foreign profits in the first quarter as companies needed cash to weather the virus. This was the highest quarter since the first quarter of 2018 following the new tax law.
- Housing starts rose 4.3% in May following a 30.2% decline in April. Most of the increase was due to multifamily starts.
- Permits for housing construction, an indicator of future housing starts rose 14.4% in May.
- The Federal Reserve reported that industrial production rose 1.4% in May following a 12.5% drop in April and remains 15.4% below February. Auto parts production was up but automobile production fell. Utility output fell 2.3%. Mining fell 6.8% while the oil and gas drilling component of mining fell 36.9%.
- The Labor Department reported:
- 1.51MM workers filed initial unemployment claims last week, down from the upwardly revised 1.57MM in the prior week.
- Continuing claims fell slightly from 20.9MM to 20.5MM as some return back to work.
- The EIA weekly oil report is here wpsrsummary. Also, the EIA reported in the past week:
- Field production of crude oil dropped from 11.1MM barrels to 10.5MM barrels per day. The peak production at the end of February was 13.1MM barrels per day.
- Natural gas storage rose by 85BN cubic feet and is above the five year average at this time of year.
- Baker Hughes reported the number of active oil rigs fell 10 to 189 and the number of active natural gas fell to 75.
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Loren C. Rex, CFP®, AIF®, MA Erik A Smith AIF®
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
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Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
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Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.Stocks Recover but the Reality of Reopening Remains Uncertain