June 18, 2020

Good morning,

In a lackluster day of trading, the U.S. equity markets moved in a tight range above and below their starting point until near day’s end.  At the close, the Dow and S&P 500 dripped into the red, losing 170.37 and 11.25 points, respectively.  The NASDAQ was able to remain only slightly positive for the day, gaining 14.66 points at the close.

Renewed concerns about a possible resurgence of the coronavirus and a continued drag on the U.S. economy have the markets on edge.  Analysts are also trying to estimate what “full” economic recovery will look like, especially in terms of corporate earnings (a major driver of stock prices).  The latest estimates are that earnings will recover in 2021, but only back to 2019 levels.  What that means for stock prices has yet to be seen, but the makings of a classic “V” shaped market recovery are in place.

The Department of Labor reported this morning that another 1.5 million workers filed for unemployment benefits last week, a reduction of only 58,000 from the week before.  First-time unemployment claims have been on the decline since they reached their peak of 6.9 million at the end of March, but of concern is that last week’s decline in claims was the smallest. 

Dow futures were down more than 100 points at start of the day at 6:30am PDT but reached into the positive at about 7:30am.  The NASDAQ continues to be more resilient than the Dow and S&P 500 and is up slightly so far today.