Market Update: Fri, May 15, 2020 | LPL Financial Research


Stocks pull back. Stocks opened down after yesterday’s solid finish, while Asian markets were mostly higher and European markets rallied. Investors are digesting the pandemic’s effects in addition to political tensions between China and many world leaders concerning the actual origins of the outbreak. Hopes of a V-shaped recovery are waning somewhat. WTI crude oil continues to enjoy an impressive run, up another 3% today after gaining 9% yesterday on an unexpected drop in US crude stockpiles— which was a first in 15 weeks.

Big reversal. Stocks were down big at the open but rallied significantly by the close on Thursday. In fact, the Dow rallied more than 835 points off the lows, the largest point reversal since April 6. The S&P 500 Index, meanwhile, was down as much as 1.9% in the morning, but finished more than 1% higher. It hasn’t done that since February 6, 2016, showing just how large yesterday’s reversal really was for stocks.

Retail sales decline accelerates. Retail sales fell 16.4% in April after declining 8.3% in March. The impact of COVID-19-related restrictions continues to be apparent, with weakness in clothing sales, electronics, and home furnishings. Even grocery sales were weaker after a surge last month. While lower demand is certainly having an impact as the labor market deteriorates, we still see store closures as the primary culprit—even with fiscal stimulus helping to support incomes. As the economy slowly starts to reopen, we expect pent-up demand to start supporting retail sales, with prospects for a solid rebound in the second half of the year. We will discuss today’s historically weak number in detail later today on the LPL Research blog.

A look at recent weakness. Volatility has reemerged this week, with the S&P 500 pulling back nearly 3% so far. We take a look at recent price action to see whether this trend can continue in our LPL Research blog


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