Market Update: Wed, Jun 3, 2020 | LPL Financial Research


Stocks open higher again. Equities are higher across the globe on continued optimism of economies reopening, along with surprisingly strong services data out of China, which shows the world’s second-largest economy continues to recover. Better high-frequency economic data and massive fiscal and monetary stimulus are helping confidence.

50 days ago. The S&P 500 Index bottomed March 23—exactly 50 trading days ago. From those bear market lows, the S&P 500 has gained 37.7%, with optimism over the economy reopening, better real-time economic data, record fiscal and monetary stimulus, no new major spikes in COVID-19, and optimism over a vaccine all playing a part in the historic jump from the lows.

10-year highs in Chinese services. The Caixin services Purchasing Managers’ Index (PMI) spiked to a 10-year high in May, marking the first move to expansion levels since January and the largest monthly increase ever for China. Easing COVID-19 restrictions were cited as the main reason. Given the United States is a few months behind China in terms of the COVID-19 pandemic, this could be another clue that better economic data is on the way.

More stimulus on the way. The White House and Senate are expected to start hammering out a potential $1 trillion (or more) stimulus bill next week. Internationally, stimulus discussions continue today in Germany.

Bond market signals diverging but improving. Intermediate-term Treasury yields have had only a modest advance in recent months, despite the S&P 500’s strong rally, but there are signs that bond markets may be seeing better times ahead. Bond markets have been functioning more smoothly as sectors that saw the deepest dislocations, such as municipal bonds and high-yield corporates, continue to move toward normalcy. We will discuss this later today on the LPL Research blog.

Latest COVID-19 news. Changes in methodology have made this week’s COVID-19 infection and fatality data difficult to interpret, as we continue to watch certain Sunbelt states, California, and Texas, where positive trends may be at risk of reversing. Dr. Anthony Fauci expressed increased optimism that a vaccine may be ready by year-end.


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