Market Update: Wed, May 20, 2020 | LPL Financial Research


Memorial Day Holiday. LPL Financial and the markets will be closed Monday, May 25, in recognition of Memorial Day. We will resume normal business hours Tuesday, May 26.

Stocks trend higher. Stocks opened higher after a weak showing on Tuesday, given the sobering news that vaccine experts were unable to use Monday’s data to draw firm conclusions on the effectiveness of Moderna’s COVID-19 vaccine. The broad market has taken some support from positive treatment and vaccine headlines as a complement to a generally more optimistic economic reopening. Asian equities showed mixed results while European markets were mostly lower.

Fed minutes release. Given the multiple public appearances and communications that Federal Reserve Chair Jerome Powell has made since the beginning of the pandemic, the market is not expecting today’s release of the Fed minutes to provide much additional context. We already know the Fed will not be considering negative rates, which LPL Research views as a positive. However, we may gain additional insight concerning the pace of asset purchases along with the handling of the Fed’s balance sheet.

What happens now. The S&P 500 Index gained more than 32% in 40 days off the March 23 lows. Although we remain bullish longer-term, the number of near-term worries is building. Looking at past major bear market lows, stocks have tended to pull back an average of about 10% after the initial rally off the lows. We think this could be a likely scenario again, as we will discuss later today on the LPL Research blog.



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