Monthly Market Review – May 2020

The Markets (as of market close May 29, 2020)

May saw several states and foreign countries ease restrictions put in place in response to the COVID-19 pandemic. As economies slowly picked up momentum, investors grew more confident in stocks, driving values higher. However, investor optimism was kept in check by sobering economic reports and growing tensions between the United States and China.

The unemployment rate reached its highest level since the Great Depression while claims for unemployment insurance soared past 25 million. Economic output lagged in April as expected. Hardest hit were automakers, restaurants, and airlines. The month closed with a speech from President Trump condemning China over the pandemic, Hong Kong, and several other “broken promises.”

Despite these issues, investors drew optimism from the possibility that a COVID-19 vaccine is on the horizon, the gradual lifting of lockdowns, and the stimulus efforts in play. While May didn’t see the double-digit gains enjoyed in April, the benchmark indexes listed here still managed to post encouraging returns. The tech-heavy Nasdaq led the way, followed closely by the small caps of the Russell 2000, each index ending the month more than 6.0% ahead. The large caps of the Dow and S&P 500 advanced by more than 4.0%, and the Global Dow increased by over 3.25%.

Year to date, only the Nasdaq is comfortably ahead of its 2019 closing value. The S&P 500 is less than 6.0% from breakeven, while the other indexes listed here remain well off their year-end pace.

By the close of trading on April 30, the price of crude oil (CL=F) sank to $19.04 per barrel, well below the March 31 price of $20.35 per barrel. Reeling oil values sent prices at the pump spiraling downward. The national average retail regular gasoline price was $1.960 per gallon on May 25, up from the April 27 selling price of $1.773 but $0.862 less than a year ago. The price of gold rose by the end of April, climbing to $1,691.00 by close of business on the 30th, up from its $1,591.20 price at the end of March.

Stock Market Indexes

Market/Index 2019 Close Prior Month As of May 29 Month Change YTD Change
DJIA 28,538.44 24,345.72 25,383.11 4.26% -11.06%
Nasdaq 8,972.60 8,889.55 9,489.87 6.75% 5.76%
S&P 500 3,230.78 2,912.43 3,044.31 4.53% -5.77%
Russell 2000 1,668.47 1,310.66 1,394.04 6.36% -16.45%
Global Dow 3,251.24 2,661.71 2,749.85 3.31% -15.42%
Fed. Funds 1.50%-1.75% 0.00%-0.25% 0.00%-0.25% 0 bps -150 bps
10-year Treasuries 1.91% 0.62% 0.64% 2 bps -127 bps

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.

Latest Economic Reports

  • Employment: In April, the unemployment rate increased by 10.3 percentage points to 14.7%. This is the highest rate and the largest over-the-month increase in the history of the series. The number of unemployed persons rose by 15.9 million to 23.1 million in April. The sharp increases in these measures reflect the effects of the coronavirus pandemic and efforts to contain it. The number of unemployed persons who reported being on temporary layoff increased about tenfold to 18.1 million in April. The number of permanent job losses increased by 544,000 to 2.0 million. The labor force participation rate decreased by 2.5 percentage points over the month to 60.2%, the lowest rate since January 1973. Total employment fell by 22.4 million to 133.4 million. The employment-population ratio, at 51.3%, dropped by 8.7 percentage points over the month. This is the lowest rate and largest over-the-month decline in the history of the series. In April, employment in leisure and hospitality plummeted by 7.7 million, or 47.0%. Almost three-quarters of the decrease occurred in food services and drinking places (-5.5 million). Employment also fell in the arts, entertainment, and recreation industry (-1.3 million) and in the accommodation industry (-839,000). In April, average hourly earnings for all employees rose by $1.34 to $30.01. The increases in average hourly earnings largely reflect the substantial job loss among lower-paid workers. The average workweek increased by 0.1 hour to 34.2 hours in April.
  • FOMC/interest rates: The Federal Open Market Committee did not meet in May. Interest rates remained unchanged in May.
  • GDP/budget: The second estimate of the first-quarter gross domestic product showed economic growth decreased 5.0%. The GDP expanded at an annual rate of 2.1% in the fourth quarter. The decline in first-quarter GDP reflected the response to the spread of COVID-19, as governments issued “stay-at-home” orders in March. This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending. Personal consumption expenditures (consumer spending) decreased by 6.8% (compared to 1.8% growth in the fourth quarter). Orders for durable goods fell 13.2%. Nonresidential fixed investment decreased 7.9%. Exports fell 8.7% while imports plummeted 15.5%. Consumer prices rose 1.3% (1.4% in the fourth quarter).
  • The government deficit in April was $738 billion, well ahead of the March deficit of $119 billion. Outlays for April totaled $980 billion, an increase of $624 billion over March and $604 billion over April 2019, largely due to the release of assistance related to the COVID-19. This assistance included Economic Impact Payments to individuals and families ($217 billion); Coronavirus Relief Fund payments to state, territorial, local and tribal governments ($142 billion); increases in Medicare and other Department of Health and Human Services programs ($146 billion); and increases in unemployment benefits and other Department of Labor programs ($46 billion). April receipts were $5 billion greater than March receipts but $294 billion lower than April 2019, as certain taxes from individuals and corporations were deferred until July.
  • Inflation/consumer spending: According to the Personal Income and Outlays report for April, both personal income and disposable (after-tax) income did an about-face, increasing 10.5% and 12.9%, respectively, after plunging in March. Consumer spending continued to fall, down 13.6% in April after declining 7.5% the previous month. Price inflation remained low, however, as consumer prices dropped 0.5%. Over the last 12 months, consumer prices are up only 0.5%.
  • The Consumer Price Index fell 0.8% in April after dropping 0.4% in March. The April decrease was the largest monthly decline since December 2008. Over the last 12 months, the all items index increased 0.3%. A 20.6% decline in gasoline prices was a major cause of the monthly decrease, but apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well. In contrast, the food index rose in April, with the index for food at home posting its largest monthly increase since February 1974.
  • Prices producers receive for goods and services followed a 0.2% decline in March with a 1.3% fall in April — the largest decrease since the index began in December 2009. The Producer Price Index moved down 1.2% for the 12 months ended in April, the largest decline since falling 1.3% for the 12 months ended November 2015. Prices less foods, energy, and trade services fell 0.9% in April, the largest decline since the index was introduced in September 2013. The index for goods fell 3.3% in April, the largest decline since the series began in December 2009. Most of the broad-based decrease is attributable to prices for energy, which fell 19.0%.
  • Housing: Sales of existing homes plunged 17.8% in April after falling 8.5% in March. Year over year, existing home sales are down 17.2%. April’s decline in existing home sales is the largest month-over-month drop since July 2010 (-22.5%). The median sales price for existing homes was $286,800 in April compared to $280,600 in March. Existing home prices were up 7.4% from April 2019. Total housing inventory at the end of April represented a 4.1-month supply at the current sales price. Sales of new single-family homes followed a 15.4% decline in March by climbing 0.6% in April. Sales are 6.2% below the April 2019 estimate. The median sales price of new houses sold in April was $309,900 ($321,400 in March). The average sales price was $364,500 in April ($375,300 in March). Available inventory in April sat at a 6.3-month supply, essentially the same rate of availability as in March.
  • Manufacturing: Industrial production plummeted 11.2% in April after falling 5.4% in March. The April decline was the largest monthly drop in the 101-year history of the index, as the COVID-19 pandemic led many factories to slow or suspend operations throughout the month. Manufacturing output dropped 13.7%, its largest decline on record, as all major industries posted decreases. The output of motor vehicles and parts fell more than 70.0% while production elsewhere in manufacturing dropped 10.3%. Utilities and mining decreased 0.9% and 6.1%, respectively. Total industrial production was 15.0% lower in April than it was a year earlier.
  • New orders for durable goods followed a 16.6% decrease in March with a 17.2% drop in April. Over the last 12 months, new orders for durable goods are down 11.4%. While most manufacturers of durable goods saw orders fall, hardest hit sectors included motor vehicles and parts (-52.8%), transportation equipment (-47.3%), and defense aircraft and parts (-32.7%). New orders for capital goods (manufactured assets used by businesses to produce consumer goods) fell 1.8% in April, dragged down by defense capital goods as new orders for nondefense capital goods rose 8.2%.
  • Imports and exports: Import prices fell 2.6% in April following a 2.4% decline in March. The April decrease in import prices was the largest decline since import prices fell 3.2% in January 2015. Since April 2019, import prices have fallen 6.8%, the greatest year-over-year fall since import prices dropped 8.3% for the 12 months ended in December 2015. Fuel imports plunged 31.5% in April, the largest monthly decline in the history of the index. Prices for exports dropped 3.3% in April after a 1.7% decline in March. This is the largest monthly decrease in export prices since the index was first published. Prices for exports decreased 7.0% on a 12-month basis from April 2019, the largest over-the-year decline since a 7.3% drop for the year ended September 2015.
  • The international trade in goods deficit was $69.7 billion in April, up $4.7 billion, or 7.2%, from $65.0 billion in March. Exports of goods for April were $95.4 billion, $32.2 billion less than March exports. Imports of goods for April were $165.0 billion, $27.5 billion less than March imports.
  • The latest information on international trade in goods and services is for March and shows that the goods and services trade deficit was $44.4 billion, an increase of $4.6 billion, or 11.6%, over the February deficit. March exports were $187.7 billion ($207.7 billion in February). March imports were $232.2 billion ($247.5 billion in February).
  • International markets: As more countries relaxed COVID-19 restrictions, economies and stock markets began to slowly show favorable movement. The European Union proposed a 750 billion euro recovery fund. The news in other countries was not as good. Brazil lost more than one million jobs over the past two months due to the pandemic. Security restrictions from China and the COVID-19 virus have stunted economic growth in Hong Kong. That country’s first quarter gross domestic product fell 5.3% from the prior quarter. In China, industrial production continued to recover in April, albeit at a moderate pace.
  • Consumer confidence: The Conference Board Consumer Confidence Index® held steady in May following a sharp decline in April. The index climbed slightly to 86.6 from April’s 85.7. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — fell from 73.0 to 71.1. However, the Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, improved from 94.3 in April to 96.9 in May.

Eye on the Month Ahead

April’s economic data was generally dreary. As more states eased restrictions put in place to help combat COVID-19, May should show a slight uptick in some economic sectors.

What I’m Watching This Week – 1 June 2020

The Markets (as of market close May 29, 2020)

With the stock market closed last Monday in observance of Memorial Day, Tuesday’s trading led to solid returns for each of the benchmark indexes listed here. The S&P 500 climbed past the 3000 mark for the first time since March, only to trickle below by the end of the day. The small caps of the Russell 2000 led the indexes after climbing 2.77%, followed by the Dow (2.17%), the Global Dow (1.96%), and the Nasdaq (0.17%). Stocks soared for most of the day, only to be tempered later on Tuesday after a report arose that President Trump was considering imposing sanctions on Chinese officials.

The Dow closed up over 2.0% on Wednesday to reach 25,000 for the first time since early March. The S&P 500 gained nearly 1.5%, pushing past 3,000 for the first time since March 5. The Nasdaq was held back by some large tech stocks, yet still managed to close up by over 0.75%. The small caps of the Russell 2000 surged ahead by more than 3.0% by the close of trading last Wednesday. The possibility of cash incentives to get people back to work was another sign that the economy is slowly beginning to rally. Globally, the STOXX Europe 600 index rose 0.2% on the heels of the European Union’s proposal of an $825 billion recovery fund to help offset the economic ravages caused by the pandemic.

Fears that President Trump would take action against China sent markets reeling at the end of the day last Thursday. Stocks fell for the first time in four days as each of the U.S. benchmarks listed here closed the day in the red. Only the Global Dow posted a modest gain. Reopening economies provided optimism for foreign investors, pushing European stocks higher. Crude oil prices continued to climb, gaining nearly 2.0% on the day.

Investor optimism remains driven by the prospects of an economic recovery. Stocks surged ahead last Friday and for the week, despite President Trump’s condemnation of China for its handling of the pandemic and its increasing attempt to exert control in Hong Kong, although he did not suggest the imposition of further economic sanctions.

For the week, each of the benchmarks listed here posted solid gains, led by the Global Dow, pushed ahead by growing economic hopefulness in both Europe and Asia. The Dow gained nearly 4.0%, followed by the S&P 500, the small caps of the Russell 2000, and the tech stocks of the Nasdaq. Year to date, the Nasdaq is close to 6.0% ahead of its 2020 starting point, while the S&P 500 is quickly closing the gap.

Crude oil prices vaulted ahead again last week, closing at $35.34 per barrel by late Friday afternoon, up from the prior week’s price of $33.33. The price of gold (COMEX) rebounded last week, closing at $1,745.80 by late Friday afternoon, up from the prior week’s price of $1,734.00. Gas at the pump continues to rise. The national average retail regular gasoline price was $1.960 per gallon on May 25, 2020, $0.082 higher than the prior week’s price but $0.862 less than a year ago.

Stock Market Indexes

Market/Index 2019 Close Prior Week As of 5/29 Weekly Change YTD Change
DJIA 28,538.44 24,465.16 25,383.11 3.75% -11.06%
Nasdaq 8,972.60 9,324.59 9,489.87 1.77% 5.76%
S&P 500 3,230.78 2,955.45 3,044.31 3.01% -5.77%
Russell 2000 1,668.47 1,355.53 1,394.04 2.84% -16.45%
Global Dow 3,251.24 2,640.16 2,749.85 4.15% -15.42%
Fed. Funds target rate 1.50%-1.75% 0.00%-0.25% 0.00%-0.25% 0 bps -150 bps
10-year Treasuries 1.91% 0.65% 0.64% -1 bps -127 bps

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.

Last Week’s Economic News

  • The gross domestic product decreased at an annual rate of 5.0% in the first quarter of 2020, according to the second estimate released by the Bureau of Economic Analysis. The GDP increased 2.1% in the fourth quarter. Real gross domestic income decreased 4.2% in the first quarter, in contrast to an increase of 3.1% (revised) in the fourth quarter. The price index for gross domestic purchases increased 1.7% in the first quarter, compared with an increase of 1.4% in the fourth quarter. Consumer prices increased 1.3% in the first quarter, compared with an increase of 1.4% in the fourth quarter.
  • Inflationary pressures remain low, while personal income soared in April, according to the latest figures from the Bureau of Economic Analysis. Prices paid by consumers for goods and services fell 0.5% last month and are up a scant 0.5% over the past 12 months. Personal income and disposable personal income increased 10.5% and 12.9%, respectively. The increased income didn’t translate to increased consumer purchases, however. Personal consumption expenditures dropped 13.6% in April. Clearly, these figures were significantly impacted by the pandemic. For instance, personal income expanded but wages and salaries fell. The increase in personal income is attributable largely to unemployment benefits paid.
  • The advance report on international trade in goods revealed a deficit of $4.7 billion in April, 7.2% greater than the deficit in March. Exports decreased 25.2% last month. Imports fell 14.3% from March. Exports and imports for automotive vehicles fell dramatically, declining 68.5% and 55.2%, respectively.
  • Sales of new single-family homes rose by 0.6% in April, according to the latest report from the Census Bureau. However, new home sales are down 6.2% from April 2019. The median sales price of new houses sold in April 2020 was $309,900 ($326,900 in March). The average sales price was $364,500 ($377,400 in March). The estimate of new houses for sale at the end of April was 325,000. This represents a supply of 6.3 months at the current sales rate.
  • New orders for manufactured durable goods in April decreased $35.4 billion, or 17.2%. This decrease, down three of the last four months, followed a 16.6% March decrease. Excluding transportation, new orders decreased 7.4%. Excluding defense, new orders decreased 16.2%. Transportation equipment, also down three of the last four months, led the decrease, down $23.9 billion, or 47.3%. Shipments of manufactured durable goods in April, down three of the last four months, decreased $41.5 billion, or 17.7%. Unfilled orders for manufactured durable goods in April, down two consecutive months, decreased $17.5 billion, or 1.6%. Inventories of manufactured durable goods in April, up two consecutive months, increased $0.7 billion, or 0.2%. On the other hand, nondefense new orders for capital goods in April increased $3.8 billion, or 8.2%.
  • For the week ended May 23, there were 2,123,000 claims for unemployment insurance, a decrease of 323,000 from the previous week’s level, which was revised up by 8,000. According to the Department of Labor, the advance rate for insured unemployment claims decreased 2.6 percentage points to 14.5% for the week ended May 16. The advance number of those receiving unemployment insurance benefits during the week ended May 16 was 21,052,000, a decrease of 3,860,000 from the prior week’s level, which was revised down by 161,000.

Eye on the Week Ahead

Key economic data out this week focuses on the employment numbers for May. April saw 20.5 million jobs lost and an unemployment rate that soared to 14.7%.

What I’m Watching This Week – 26 May 2020

The Markets (as of market close May 22, 2020)

The major benchmarks opened the week on a high note, led by the Russell 2000, which gained more than 6.0%. The large caps of the Dow (3.85%) and S&P 500 (3.15%) posted notable gains, as did the Global Dow (3.67%). The tech-heavy Nasdaq climbed nearly 2.5%. Investors were buoyed by positive COVID-19 news. Data showed new cases of the virus were growing at the slowest rate in months. Monday morning, biotech company Moderna reported encouraging results from human testing of a vaccine. This followed Sunday night’s remarks from Federal Reserve Chair Jerome Powell that more monetary stimulus may be on the way.

Stocks couldn’t keep up with the pace set on Monday, as gains were relinquished by the close of trading Tuesday. Investors seemed to ride the wave of information on a possible COVID-19 vaccine from Moderna. While Monday’s report was upbeat, another article on Tuesday questioned the sufficiency of the study’s data. Crude oil prices continued to rise, reaching $32.36 by late Tuesday afternoon.

Wednesday saw stocks rebound, led by the small caps of the Russell 2000, which jumped 3.0%, followed by the tech-heavy Nasdaq, and the large caps of the S&P 500 and the Dow. Once again, investors got encouraging news about a vaccine from another biotech firm. As more states relaxed restrictions, investors gleaned hope of an economic restart. Finally, oil prices rose for the fifth consecutive day. Many consumers are noticing higher gas prices at the pumps just in time for Memorial Day and the unofficial start of summer.

Thursday saw stocks dip on news of an additional 2.4 million claims for unemployment insurance last week, pushing the total number of claimants past 25 million. Adding to investor angst is rising trade tension between the United States and China. Energy, tech, and utilities sectors took hits, and gold prices fell while crude oil climbed for the sixth straight trading day. Of the benchmarks listed here, only the Russell 2000 grew, while the remaining indexes ended the day in the red.

Friday was a mixed bag of information and returns in the market. The Dow and Global Dow each fell less than a point while the S&P 500, the Nasdaq, and the Russell 2000 each ticked up less than a point. Trouble between Hong Kong and Beijing sparked protests and drove Asian securities lower, adding to the tensions between the United States and China. On the other hand, states continued to gradually relax stay-at-home orders. The price of crude oil fell for the first time in several days yet closed the week ahead.

Overall, the benchmark indexes listed here posted solid weekly returns, led by the small caps of the Russell 2000, which climbed nearly 8.0%. The remaining indexes ended the week with gains of over 3.0%, respectively. Long-term bond yields remained about the same as bond prices were relatively stable.

Crude oil prices continue to climb, closing last week at $33.33 per barrel by late Friday afternoon, up from the prior week’s price of $29.71. The price of gold (COMEX) dipped last week, closing at $1,734.00 by late Friday afternoon, down from the prior week’s price of $1,752.50. The national average retail regular gasoline price was $1.878 per gallon on May 18, 2020, $0.027 higher than the prior week’s price but $0.974 less than a year ago.

Stock Market Indexes

Market/Index 2019 Close Prior Week As of 5/22 Weekly Change YTD Change
DJIA 28,538.44 23,685.42 24,465.16 3.29% -14.27%
Nasdaq 8,972.60 9,014.56 9,324.59 3.44% 3.92%
S&P 500 3,230.78 2,863.70 2,955.45 3.20% -8.52%
Russell 2000 1,668.47 1,256.99 1,355.53 7.84% -18.76%
Global Dow 3,251.24 2,549.34 2,640.16 3.56% -18.80%
Fed. Funds target rate 1.50%-1.75% 0.00%-0.25% 0.00%-0.25% 0 bps -150 bps
10-year Treasuries 1.91% 0.64% 0.65% 1 bps -126 bps

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.

Last Week’s Economic News

  • New home construction took a historic dip in April, according to the latest report from the Census Bureau. Housing starts fell 30.2% in April from March, the largest monthly percentage decline on record. April’s rate is 29.7% below the April 2019 rate. Single-family housing starts in April were 25.4% below the March figure. The number of building permits issued in April were 20.8% below the previous month’s level and 19.2% under the April 2019 rate. Permits for construction of single-family homes were down 24.3% for the month. Home completions were 8.1% below the March estimate and 11.8% under the rate a year ago. Single-family home completions in April were 4.9% under the March total.
  • Sales of existing homes plummeted for the second consecutive month in April, falling 17.8% from the March sales pace. Overall, sales of existing homes are down 17.2% from a year ago. April’s sales have fallen to the lowest level and the largest month-over-month drop since July 2010 (-22.5%). The median price for existing homes sold in April was $286,800, 2.2% higher than the previous month’s price ($280,600), and 7.4% over the median price last April ($267,000). Total housing inventory was 1.47 million units, down 1.3% from March and 19.7% lower than the April 2019 total. Unsold inventory sits at a 4.1-month supply at the current sales pace, up from 3.4 months in March.
  • For the week ended May 16, there were 2,438,000 claims for unemployment insurance, a decrease of 249,000 from the previous week’s level, which was revised down by 294,000. According to the Department of Labor, the advance rate for insured unemployment claims was 17.2% for the week ended May 9, an increase of 1.7 percentage points from the previous week’s rate, which was revised down by 0.2 percentage point from 15.7% to 15.5%. The advance number of those receiving unemployment insurance benefits during the week ended May 9 was 25,073,000, an increase of 2,525,000 from the prior week’s level, which was revised down by 285,000.

Eye on the Week Ahead

The last week of the month brings with it the remaining key economic reports for April. Two reports that will warrant particular attention are the gross domestic product report for the first quarter and the personal income and outlays report. This is the second iteration of the first-quarter GDP and is based on more complete data. The initial reading last month saw the economy regress by 4.8% from the fourth quarter of last year. The April report for personal income and outlays is expected to show notable drops in consumer income, spending, and prices for consumer goods and services.

What I’m Watching This Week – 18 May 2020

The Markets (as of market close May 15, 2020)

Stocks opened the week with mixed returns. The S&P 500 stayed level, the Dow fell by almost half a point, and the Nasdaq finished the day up three-quarters of a percent. Crude oil prices dropped by nearly one percent. Positive news came from New York last Monday as Governor Cuomo indicated some businesses would be able to reopen on a regional basis, as the state reported the lowest number of COVID-19-related deaths since March.

The major indexes tumbled last Tuesday, halting a multiday win streak for the Nasdaq. The Dow lost over 450 points, or 1.89%, its largest one-day percentage drop since May 1. Both the S&P 500 and the Nasdaq fell more than 2.0%. Grim news on the COVID-19 front seems to have driven the market. Several countries that had begun to ease restrictions saw a spike in new virus cases reported. Wuhan, the Chinese city that reported the first cases of COVID-19, had people test positive for the first time in more than a month. Finally, Dr. Anthony Fauci, head of the U.S. National Institute of Allergy and Infectious Diseases, in testimony before the Senate, warned that reopening the nation too soon and without caution and expanded testing could lead to “needless suffering and death.”

Stocks were sent reeling last Wednesday following Federal Reserve Chair Jerome Powell’s warning against the likelihood of a rapid economic recovery. Powell also suggested that Congress enact further economic stimulus to ease the risk of long-lasting economic damage as the country tries to recover from the pandemic. Each of the major benchmark indexes listed here plunged deeper into the red by the end of the day’s trading. The Russell 2000 dropped 3.3%, and the Dow slid close to 2.2%. The Nasdaq, which had surpassed its year-end value following a series of daily gains, fell back into negative territory for the year.

Thursday saw nearly 3 million new claims for unemployment insurance, bringing the total of those receiving unemployment insurance benefits to almost 23 million. Despite that report, investors returned to the market, pushing the major indexes higher. The Dow gained over 377 points or 1.63%, the S&P 500 pushed ahead by 1.15%, and the Nasdaq rose by nearly 1.0%. Stocks of some major banks surged Thursday, driving the large-cap benchmarks.

Stocks closed Friday higher, but not enough to recover from midweek losses, ultimately ending last week’s trading on the downside. Last Friday was full of conflicting information for investors to digest. Retail sales posted historic losses, the trade war with China was rekindled, and the House of Representatives was set to vote on an additional $3 trillion COVID-19 relief package. By the close of trading last Friday, each of the benchmark indexes listed here lost value, led by the small-cap Russell 2000, which dropped nearly 5.5%. The Global Dow fell by more than 3.3%, followed by the large caps of the Dow and the S&P 500. The Nasdaq ended the week down a little more than 1.0%, but not enough to pull it below its year-end value. The other major indexes remain well below their 2019 closing marks, however.

With production curtailed, crude oil prices are steadily rising. Prices closed last week at $29.71 per barrel by late Friday afternoon, up from the prior week’s price of $24.81. The price of gold (COMEX) continued to climb last week, closing at $1,752.50 by late Friday afternoon, up from the prior week’s price of $1,708.00. The national average retail regular gasoline price was $1.851 per gallon on May 11, 2020, $0.062 higher than the prior week’s price but $1.015 less than a year ago.

Stock Market Indexes

Market/Index 2019 Close Prior Week As of 5/15 Weekly Change YTD Change
DJIA 28,538.44 24,331.32 23,685.42 -2.65% -17.01%
Nasdaq 8,972.60 9,121.32 9,014.56 -1.17% 0.47%
S&P 500 3,230.78 2,929.80 2,863.70 -2.26% -11.36%
Russell 2000 1,668.47 1,329.64 1,256.99 -5.46% -24.66%
Global Dow 3,251.24 2,637.25 2,549.34 -3.33% -21.59%
Fed. Funds target rate 1.50%-1.75% 0.00%-0.25% 0.00%-0.25% 0 bps -150 bps
10-year Treasuries 1.91% 0.68% 0.64% -4 bps -127 bps

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.

Last Week’s Economic News

  • Inflationary pressures at the consumer level are muted, impacted by plunging gasoline prices. The Consumer Price Index fell 0.8% in April, the largest monthly decline since December 2008. Over the last 12 months ended in April, consumer prices are up a scant 0.3%, the smallest 12-month increase since October 2015. A 20.6% drop in gasoline prices was the largest contributor to the monthly decrease in the CPI, but prices for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well. Conversely, prices for food rose in April, with food at home posting its largest monthly increase since February 1974.
  • Sales at the retail level plummeted 16.4% in April from March, and 21.6% below April 2019. Retail trade sales were down 15.1% in April and 17.8% below last year. Clothing and clothing accessories stores saw sales fall 89.3% while online retailers enjoyed a spike in sales of 21.6%.
  • Not surprisingly, prices at the producer level also declined in April, falling 1.3% from the previous month. This is the largest decrease since the index began in December 2009. For the 12 months ended in April, producer prices are down 1.2%, the biggest drop since the 12 months ended in November 2015. In April, a 3.3% plunge in prices for goods accounted for much of the overall price decrease. Prices for services fell 0.2%. A 56.6% reduction in gasoline prices accounted for two-thirds of the decline in the prices for goods.
  • The federal government deficit soared to $737.9 billion in April, far ahead of the $119 billion monthly deficit for March. According to the report from the Federal Reserve, in April, outlays totaled $980 billion, an increase of $604 billion from April 2019, largely due to the release of assistance related to COVID-19 including: Economic Impact Payments to individuals and families ($217 billion); Coronavirus Relief Fund payments to state, territorial, local, and tribal governments ($142 billion); increases in Medicare and other Department of Health and Human Services programs ($146 billion); and increases in unemployment benefits and other Department of Labor programs ($46 billion). Receipts were $294 billion lower than in April 2019 as certain taxes from individuals and corporations were deferred until July.
  • S. import prices declined 2.6% in April following a 2.4% decrease in March. April’s decrease was the largest monthly drop since the index declined 3.2% in January 2015. Import fuel prices declined 31.5% in April, the largest 1-month drop since the index was first published monthly in September 1992. Prices for imports excluding fuel fell 0.5% in April. Prices for U.S. imports also fell on a 12-month basis, decreasing 6.8% for the year ended in April. The decrease was the largest 12-month drop since the index declined 8.3% from December 2014 to December 2015. Prices for U.S. exports fell 3.3% in April, after decreasing 1.7% the previous month. The April drop in export prices was the largest since the index started in 1988.
  • Total industrial production fell 11.2% in April for its largest monthly drop in the 101-year history of the index, as the COVID-19 pandemic led many factories to slow or suspend operations throughout the month. Manufacturing output dropped 13.7%, its largest decline on record, as all major industries posted decreases. The output of motor vehicles and parts fell more than 70% while production elsewhere in manufacturing dropped 10.3%. Total industrial production was 15.0% lower in April than it was a year earlier.
  • According to the latest Job Openings and Labor Turnover Summary, the number of total separations increased by 8.9 million to a series high of 14.5 million in March. Layoffs and discharges increased to 7.5%. Job openings decreased 813,000 to 6.2 million, or 3.9%. The largest declines were experienced in accommodation and food services (-258,000) and durable goods manufacturing (-82,000). The number of hires fell 3.4%, or 658,000, with the largest drop-offs felt in accommodation and food services (-344,000), health care and social assistance (-87,000), and durable goods manufacturing (-33,000).
  • For the week ended May 9, there were 2,981,000 claims for unemployment insurance, a decrease of 195,000 from the previous week’s level, which was revised up by 7,000. According to the Department of Labor, the advance rate for insured unemployment claims was 15.7% for the week ended May 2, an increase of 0.3 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 2 was 22,833,000, an increase of 456,000 from the prior week’s level, which was revised down by 270,000.

Eye on the Week Ahead

This week begins to focus on the housing sector with the release of the latest information on new home construction and existing home sales. March saw sales of existing homes drop by over 8.0%.

What I’m Watching This Week – 11 May 2020

The Markets (as of market close May 8, 2020)

Investors continue to move toward stocks despite unfavorable economic data. New scientific and medical developments in the battle against COVID-19 offer hope. Last Monday saw stocks rebound from losses earlier in the day to close on a high note. Surging oil prices gave a boost to energy shares, which helped drive the market higher. Each of the benchmark indexes listed here closed Monday in the black.

The stock market continued to rally on Tuesday. Favorable earnings reports from some major companies, coupled with more states and foreign countries easing restrictions, offered encouragement to investors.

Stocks fell for the first time in three days on Wednesday as investors were hit with mixed earnings reports and worsening economic data. Treasury yields increased as bond prices fell. Crude oil prices, which had climbed following a decrease in production, also dropped for the first time in several days.

Despite claims for unemployment insurance benefits soaring past 22 million, stocks continued to climb last Thursday. Each of the three major indexes gained at least 1.5% for the day. In particular, the Nasdaq pushed ahead of its year-end value for the first time since early March.

Friday saw the release of the latest employment figures for April, which produced several historic statistics including the highest unemployment rate since the Great Depression. That news didn’t stop investors from forging ahead as stocks rose again on Friday, closing the week on a sweet note. Each of the benchmark indexes listed here posted solid weekly gains, led by the Nasdaq, which is now more than 1.5% in front of its year-end value. The small caps of the Russell 2000 finished the week right behind the Nasdaq, followed by the S&P 500, the Dow, and the Global Dow. Despite sour economic news and the ongoing rise in COVID-19 cases and deaths, states continued to slowly reopen economies.

Crude oil prices continued to climb last week, closing the week at $24.81 per barrel by late Friday afternoon, up from the prior week’s price of $19.71. The price of gold (COMEX) rebounded last week, closing at $1,708.00 by late Friday afternoon, up from the prior week’s price of $1,707.60. The national average retail regular gasoline price was $1.789 per gallon on May 4, 2020, $0.016 higher than the prior week’s price but $1.108 less than a year ago.

Stock Market Indexes

Market/Index 2019 Close Prior Week As of 5/8 Weekly Change YTD Change
DJIA 28,538.44 23,723.69 24,331.32 2.56% -14.74%
Nasdaq 8,972.60 8,604.95 9,121.32 6.00% 1.66%
S&P 500 3,230.78 2,830.71 2,929.80 3.50% -9.32%
Russell 2000 1,668.47 1,260.48 1,329.64 5.49% -20.31%
Global Dow 3,251.24 2,604.17 2,637.25 1.27% -18.88%
Fed. Funds target rate 1.50%-1.75% 0.00%-0.25% 0.00%-0.25% 0 bps -150 bps
10-year Treasuries 1.91% 0.64% 0.68% 4 bps -123 bps

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.

Last Week’s Economic News

  • April saw employment fall by 20.5 million after falling 870,000 the previous month. The April decline is the largest in the history of the series (1939) and brought employment to its lowest level since February 2011. Job losses in April were widespread, with the largest employment declines occurring in leisure and hospitality (7.7 million), education and health services (2.5 million), professional and business services (2.1 million), retail trade (2.1 million), and arts, entertainment, and recreation (1.3 million). The labor force participation rate decreased by 2.5 percentage points over the month to 60.2%, the lowest rate since January 1973. Total employment fell by 22.4 million to 133.4 million. The employment-population ratio, at 51.3%, dropped by 8.7 percentage points, which is also the lowest rate and largest monthly fall in the series’ history. In April, the unemployment rate increased by 10.3 percentage points to 14.7% — the largest monthly increase in the history of this series. Average hourly earnings increased by $1.34 to $30.01. The average workweek increased by 0.1 hour to 34.2 hours in April.
  • The goods and services trade deficit expanded by $4.6 billion, or 11.6%, in March over February. Exports fell by $20.0 billion, or 9.6%, while imports dropped $15.4 billion, or 6.2%. The March declines in imports and exports were, in part, attributable to the response to the COVID-19 pandemic, as many businesses were operating at a limited capacity or ceased operations altogether, and traveling was restricted. The next report for April will likely reflect the continued impact of the virus.
  • The response to the virus also throttled the services sector. According to the latest Non-Manufacturing ISM® Report On Business®, the non-manufacturing sector contracted in April. Business activity dropped to its lowest level in the history of the survey. New orders and employment also fell dramatically.
  • For the week ended May 2, there were 3,169,000 claims for unemployment insurance, a decrease of 677,000 from the previous week’s level, which was revised up by 7,000. According to the Department of Labor, the advance rate for insured unemployment claims was 15.5% for the week ended April 25, an increase of 3.1 percentage points from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 25 was 22,647,000, an increase of 4,636,000 from the prior week’s level, which was revised up by 19,000.

Eye on the Week Ahead

More corporate earnings reports are available this week, the results of which are of definite interest to investors. Also, inflation indicators for April are available with the latest information on prices at the consumer and retail levels.

What I’m Watching This Week – 4 May 2020

The Markets (as of market close May 1, 2020)

Investors were guardedly optimistic last Monday as several countries and some states began to reopen their economies. The Russell 2000 jumped by nearly 4.0%, while the remaining indexes listed here all grabbed positive gains of at least 1.1%.

Indexes were mixed on Tuesday as the large caps of the Dow and S&P 500 lost less than one percentage point. But some tech stocks fell, pulling the Nasdaq down by close to 1.5%. The small caps of the Russell 2000 posted solid gains for the sixth day in a row. Despite the mixed market returns, consumer confidence in the current conditions plunged. In a precursor to this week’s jobs report, consumer respondents increasingly indicated that jobs are hard to get while noting that business conditions are worsening.

Stocks closed notably higher Wednesday as investors were undeterred by a slumping economy, instead focusing on reports of a potentially favorable drug in the treatment of people stricken by COVID-19. This news followed recent reports from drug testing companies on a potential vaccine for the virus. The Russell 2000 again led the way, climbing nearly 5.0% by the end of the day.

A larger-than-expected increase in claims for unemployment insurance drove stocks lower last Thursday. The S&P 500 tumbled from its seven-week high while a jump in some tech stocks limited losses for the Nasdaq. The small caps of the Russell 2000, which had been surging, came back to earth, falling more than 3.5% by the end of Thursday’s trading.

The close of the week saw the Dow, the S&P 500, and the Nasdaq give back gains from earlier in the week. Stocks retreated following disappointing earnings reports from some large tech companies, coupled with President Trump’s threat to impose import tariffs on China in retaliation for that country’s handling of the COVID-19 pandemic.

The week ended with only the small caps of the Russell 2000 and the Global Dow finishing in the black. Long-term bond yields climbed as prices fell.

Crude oil prices rebounded last week, as production cuts began last Friday. Prices closed the week at $19.71 per barrel by late Friday afternoon, up from the prior week’s price of $17.13. The price of gold (COMEX) dropped back last week, closing at $1,707.60 by late Friday afternoon, down from the prior week’s price of $1,741.50. The national average retail regular gasoline price was $1.773 per gallon on April 27, 2020, $0.039 lower than the prior week’s price and $1.114 less than a year ago.

Stock Market Indexes

Market/Index 2019 Close Prior Week As of 5/1 Weekly Change YTD Change
DJIA 28,538.44 23,775.27 23,723.69 -0.22% -16.87%
Nasdaq 8,972.60 8,634.52 8,604.95 -0.34% -4.10%
S&P 500 3,230.78 2,836.74 2,830.71 -0.21% -12.38%
Russell 2000 1,668.47 1,233.05 1,260.48 2.22% -24.45%
Global Dow 3,251.24 2,558.72 2,604.17 1.78% -19.90%
Fed. Funds target rate 1.50%-1.75% 0.00%-0.25% 0.00%-0.25% 0 bps -150 bps
10-year Treasuries 1.91% 0.59% 0.64% 5 bps -127 bps

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.

Last Week’s Economic News

  • Following its meeting on April 29, the Federal Open Market Committee decided to maintain the target range for the federal funds rate at its current 0.00%-0.25%, noting that sharp declines in economic activity will likely continue. However, the Committee was clear that it would use its full range of tools to support the U.S. economy. In addition, the FOMC expects to maintain the target range until it is confident that the economy is progressing positively toward maximum employment and price stability.
  • The pandemic cut economic production more than expected. The initial, or advance, estimate of the first-quarter gross domestic product revealed that economic production decreased at an annual rate of 4.8%. That’s the steepest plunge since the fourth quarter of 2008. According to the Bureau of Economic Analysis report, “The decline in first-quarter GDP was, in part, due to the response to the spread of COVID-19, as governments issued ‘stay-at-home’ orders in March. This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.” Personal income increased $95.2 billion in the first quarter, compared with an increase of $144.1 billion in the fourth quarter. Disposable personal income increased $76.7 billion, or 1.9%, in the first quarter, compared with an increase of $123.7 billion, or 3.0%, in the fourth quarter. Consumer spending decreased 7.6% in the first quarter, compared with an increase of 1.8% in the fourth quarter.
  • In yet another sign of a slowing economy due to the pandemic, consumer spending decreased $1,127.3 billion, or 7.5%, in March. Both personal income and disposable (after-tax) income fell 2.0%, respectively. Consumer prices dropped 0.3%. Excluding food and energy, prices decreased 0.1%. According to the latest Personal Income and Outlays report from the Bureau of Economic Analysis, the response to the pandemic led to rapid changes in demand, and consumers canceled, restricted, or redirected their spending.
  • The international trade in goods deficit was $64.2 billion in March, up $4.3 billion from $59.9 billion in February. Exports of goods for March were $127.6 billion, $9.1 billion less than February exports. Imports of goods for March were $191.9 billion, $4.8 billion less than February imports.
  • According to the IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™, purchasing managers reported unprecedented contraction in manufacturing for April, directly related to the COVID-19 virus. The purchasing managers’ index registered 36.1, down from March’s 48.5, marking the lowest reading for more than 11 years. Manufacturing output saw the steepest decline in the history of the series.
  • The other major purchasing managers’ report, the Manufacturing ISM® Report On Business®, revealed declines in manufacturing similar to those from the Markit report. The April purchasing managers’ index fell 7.6 percentage points from the March figure, new orders decreased 15.1 percentage points, production dropped 20.2 percentage points, and employment decreased 16.3 percentage points.
  • For the week ended April 25, there were 3,839,000 claims for unemployment insurance, a decrease of 603,000 from the previous week’s level, which was revised up by 15,000. According to the Department of Labor, the advance rate for insured unemployment claims was 12.4% for the week ended April 18, an increase of 1.5 percentage points from the previous week’s rate. This marks the highest level of insured unemployment rates in the history of the series. The advance number of those receiving unemployment insurance benefits during the week ended April 18 was 17,992,000, an increase of 2,174,000 from the prior week’s level, which was revised down by 158,000. Nevertheless, this marks the highest level of insured unemployment in the history of the series.

Eye on the Week Ahead

The most anticipated economic information out this week is the labor report for April. It is expected to reveal significant job reductions and soaring unemployment.

Monthly Market Review: April 2020

The Markets (as of market close April 30, 2020)

April began on a sour note for stocks as each of the indexes listed here lost value. Economic reports reflected the negative impact of the COVID-19 pandemic. There were more than 700,000 jobs lost in March while total claims for unemployment insurance benefits soared to nearly 18 million. A cut in production didn’t prevent crude oil prices from hitting negative numbers as demand waned and storage neared full capacity. Purchasing managers saw manufacturing hit lows not seen in more than ten years.

The federal government continued to try easing the economic strain on individuals and businesses. The Paycheck Protection Program and Health Care Enhancement Act replenished the Paycheck Protection Program, provided funding for additional small business loans, offered financial support to hospitals, and increased the availability for more virus testing. The Federal Reserve added trillions of dollars in funds to its lending programs for states, cities, and midsize businesses. But the economic strain prompted a few states to begin the process of easing lockdown restrictions and reopening a range of businesses, in lieu of stay-at-home restrictions.

Despite several periods of volatility, stocks enjoyed their best month since 1987. A spike during the week leading up to Easter pushed stocks ahead to stay for the month. Of the benchmark indexes listed here, only the Global Dow did not reach double-digit gains for the month. The Nasdaq climbed more than 15.0% and is less than 1.0% from its year-end value. The large caps of both the Dow (11.08%) and the S&P 500 (12.68%) posted solid gains as did the small caps of the Russell 2000, which jumped nearly 14.0%. While stock values rose in April, bond yields fell as prices climbed. The yield on 10-year Treasuries dropped 7 basis points from March and is close to 130 basis points below its 2019 value.

By the close of trading on April 30, the price of crude oil (CL=F) sank to $19.04 per barrel, well below the March 31 price of $20.35 per barrel. Reeling oil values sent prices at the pump spiraling downward. The national average retail regular gasoline price was $1.773 per gallon on April 27, down from the March 30 selling price of $2.005 and $1.114 less than a year ago. The price of gold rose by the end of April, climbing to $1,691.00 by close of business on the 30th, up from its $1,591.20 price at the end of March.

Stock Market Indexes

Market/Index 2019 Close Prior Month As of April 30 Month Change YTD Change
DJIA 28,538.44 21,917.16 24,345.72 11.08% -14.69%
Nasdaq 8,972.60 7,700.10 8,889.55 15.45% -0.93%
S&P 500 3,230.78 2,584.59 2,912.43 12.68% -9.85%
Russell 2000 1,668.47 1,153.10 1,310.66 13.66% -21.45%
Global Dow 3,251.24 2,469.53 2,661.71 7.81% -18.13%
Fed. Funds 1.50%-1.75% 0.00%-0.25% 0.00%-0.25% 0 bps -150 bps
10-year Treasuries 1.91% 0.69% 0.62% -7 bps -129 bps

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.

Latest Economic Reports

  • Employment: The jobs report for March was a stark reflection of the impact of COVID-19. After gaining over 270,000 new jobs in February, March saw employment fall by 701,000. The unemployment rate surged from 3.5% in February to 4.4% in March (the largest over-the-month increase in the rate since January 1975). The number of unemployed persons rose by 1.4 million to 7.1 million in March. Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places. Notable declines also occurred in health care and social assistance, professional and business services, retail trade, and construction. The labor force participation rate, at 62.7, decreased by 0.7 percentage point over the month. The employment-population ratio, at 60.0%, dropped by 1.1 percentage points over the month. In February, average hourly earnings for all employees rose by $0.11 to $28.62. Average hourly earnings increased by 3.1% over the last 12 months ended in March. The average workweek fell by 0.2 hour to 34.2 hours in March.
  • FOMC/interest rates: Following the conclusion of its latest meeting on April 29, the Federal Open Market Committee decided to maintain the target range for the federal funds rate at 0.00%-0.25%. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events. To support the flow of credit to households and businesses, the Federal Reserve will continue to purchase Treasury securities and agency residential and commercial mortgage-backed securities. In any case, “the Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time.”
  • GDP/budget: The response to COVID-19 dramatically slowed the economy in the first quarter. According to the initial (advance) report, the gross domestic product decreased at an annual rate of 4.8%. The GDP advanced at an annual rate of 2.1% in the fourth quarter. Personal consumption expenditures (consumer spending) decreased by 7.6% (compared to 1.8% growth in the fourth quarter). Exports fell 8.7% while imports plummeted 15.3%. Consumer prices rose 1.3% (1.4% in the fourth quarter); personal income increased $95.2 billion in the first quarter, compared with an increase of $144.1 billion in the fourth quarter; and after-tax (disposable) personal income increased $76.7 billion, or 1.9%, in the first quarter, compared with an increase of $123.7 billion, or 3.0%, in the fourth quarter.
  • The government deficit in March was $119 billion, down from February’s deficit of $235 billion. In March, the largest expenditures were for Social Security ($91 billion) and national defense ($62 billion). On the income side of the ledger, social insurance and retirement accounted for $108 billion and individual income taxes totaled $98 billion. Through the first six months of the 2020 fiscal year, the deficit sits at $744 billion, 7.7% greater than the deficit over the same period last fiscal year ($691 billion). Compared to the same six-month period last fiscal year, government receipts rose from $1.5 trillion to $1.6 trillion while spending rose from $2.2 trillion to $2.3 trillion.
  • Inflation/consumer spending: According to the Personal Income and Outlays report for March, both personal income and disposable (after-tax) income decreased 2.0%, respectively. Consumer spending fell $1,127.3 billion, or 7.5%. Price inflation remained low, however, as consumer prices dropped 0.3%. Over the last 12 months, consumer prices are up only 1.3%.
  • The Consumer Price Index fell 0.4% in March, the largest monthly decline since January 2015. Over the last 12 months, the all items index increased 1.5%, a notably smaller increase than the 2.3% increase for the period ended in February. A sharp (10.5%) decline in gasoline prices was a major cause of the monthly decrease, with decreases in airline fares, lodging away from home, and apparel also contributing.
  • Prices producers receive for goods and services fell 0.2% in March after advancing 0.6% in February. The index has increased 0.7% since last March. Producer prices less foods, energy, and trade services declined 0.2% in March, the largest decrease since falling 0.2% in October 2015. Since March 2019, prices less foods, energy, and trade services moved up 1.0%. In March, producer prices for goods fell 1.0% in March, the largest decline since moving down 1.1% in September 2015. Over 80% of the February decrease in goods prices is tied to a 16.8% drop in gasoline prices.
  • Housing: After jumping 6.5% in February, existing home sales plunged 8.5% in March. Year over year, existing home sales are up 0.8% (7.2% for the 12 months ended in February). The median sales price for existing homes was $280,600 in March, compared to $270,100 in February. Existing home prices were up 8.0% from March 2019. Total housing inventory at the end of March represented a 3.4-month supply at the current sales price. Sales of new, single-family homes followed a February slide by dropping 15.4% in March. Sales are 9.5% below the March 2019 estimate. The median sales price of new houses sold in March was $321,400 ($345,900 in February). The average sales price was $375,300 in March ($403,800 in February). Available inventory, at a 6.4-month supply, was higher than February’s 5.0-month supply.
  • Manufacturing: After increasing in February, industrial production fell 5.4% in March, as the COVID-19 pandemic led many factories to suspend operations late in the month. Total industrial production was 5.5% lower than a year earlier. Manufacturing output dropped 6.3% last month with most major industries posting decreases, led by motor vehicles and parts, which plummeted 28.0%. Durable goods orders were negatively impacted by COVID-19 in March. New orders for durable goods decreased 14.4% following a 1.1% increase in February. The March decrease followed three consecutive monthly increases. For the year, new orders for durable goods are down 5.2%. While most manufacturers of durable goods saw orders fall, hardest hit were nondefense aircraft and parts (-295.7%) and transportation equipment (-41.0%). New orders for capital goods (manufactured assets used by businesses to produce consumer goods) fell 26.8% in March, driven primarily by a decrease in new orders for nondefense capital goods, which receded 33.4%.
  • Imports and exports: Import prices fell 2.3% in March after inching down 0.5% in February. The March decrease in import prices was the largest decline since import prices fell 3.2% in January 2015. Since March 2019, import prices have fallen 4.1%, the greatest year-over-year fall since import prices dropped 4.7% for the 12 months ended in June 2016. Fuel imports plunged 26.8% in March, the largest monthly decline since prices plummeted 27.8% in November 2008. Prices for exports dropped 1.6% last month, following a 1.1% decline in February. This is the largest monthly decrease in export prices since January 2015. Prices for exports decreased 3.6% on a 12-month basis from March 2019.
  • The international trade in goods deficit was $64.2 billion in March, up $4.3 billion from $59.9 billion in February. Exports of goods for March were $127.6 billion, $9.1 billion less than February exports. Imports of goods for March were $191.9 billion, $4.8 billion less than February imports.
  • The latest information on international trade in goods and services is for February and shows that the goods and services trade deficit was $39.9 billion, down from the $45.3 billion deficit the previous month. February exports were $207.5 billion, $0.8 billion less than January exports. February imports were $247.5 billion, $6.3 billion lower than January imports.
  • International markets: Some countries began easing shutdown restrictions as COVID-19 infection levels started to level off. Germany, Italy, and Australia are a few of the nations that have begun seeing a slight reduction in the spread of the pandemic. Nevertheless, global economies are facing severe downturns. April’s purchasing managers’ indexes for the vast majority of reporting countries have proffered similar results: deepening industrial contraction. Purchasing managers’ indexes for France, and Germany and other eurozone nations recorded historic lows last month and are not expected to reverse course in May. In Asia, China’s economy contracted 6.8% on the year and -9.8% for the first quarter. The European Commission’s economic sentiment index (ESI) was down a record 26.8 points in April, reflecting a broad-based worsening of short- and long-term economic projections.
  • Consumer confidence: The Conference Board Consumer Confidence Index® deteriorated further in April following a sharp decline in March. The index fell from 120.0 in March to 86.9 in April. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — plunged 90.4 points, falling to 76.4. However, the Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, improved from 86.8 in March to 93.8 in April.

Eye on the Month Ahead

While April was a solid month for stocks, the economy has slowed dramatically. As more data is revealed, the news on the economic front is expected to continue to show the negative impact of COVID-19. Jobs, manufacturing, and government spending are sectors expected to be hit hardest.