The S&P 500 Index returned 3.27% last week, gaining back the previous week’s losses. The index is now down less than 7.8% year-to-date and is up over 32.5% since its closing low on March 23. Monday showed its best performance since early April, climbing 3.16% with strength seen in energy stocks as crude oil futures jumped 8.12%.
Equity markets were boosted by reports of early positive results from Moderna’s COVID-19 vaccine trial. Positive comments from both Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde implying their ability and willingness to adjust and respond to the current economic conditions reinforced the optimism. Building permits, housing starts, and existing home sales all reported double-digit month-over-month declines for April. U.S. initial jobless claims remain historically high, though last week’s 2.44 million is the lowest weekly claims number reported since mid-March.
Crude oil closed at $33.25 per barrel on Friday, increasing 12.98% for the week. Specialty apparel store company L Brands Inc. was the best performer in the S&P 500 Index, returning 38.86%. Though the company reported large first quarter losses last week, the stock rallied on news that the company was intent on separating its Victoria’s Secret line into a standalone business and several analysts upgraded their price targets for the stock. United Airlines Holdings Inc. returned 27.51% as vaccine optimism helped lift some of the hard-hit airline industry stocks. Air travel demand has been shuttered by the coronavirus pandemic.
Other top performing airline stocks included Alaska Air Group Inc., Southwest Airlines Company, and Delta Air Lines Inc. Medical device manufacturer Becton, Dickinson & Company returned -7.36% last week, after announcing it will raise $3 billion in common and preferred stock offerings. The stock took the bottom spot in the worst performing health care sector.
Treasury yields rose slightly over the course of the week on positive news on the development of a vaccine. The Moderna announcement of the completion of a phase-one clinical trial of their COVID-19 vaccine with positive results, caused Treasury yields to have their largest daily surge in two months on Monday as investors took a risk-on approach. Also contributing to Monday’s rally were comments by Federal Reserve Bank Chairman Jerome Powell. He said that the central bank still had ammunition and that there was no limit to what the Fed could do to lend money to the financial markets. On Wednesday and Thursday as the Treasury department held its first sale of 20-year bonds since 1986. Investors continued to seek the perceived safety of Treasury’s on Friday as tensions between the U.S. and China picked up.
Source: First Trust
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments
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