June 9, 2020

Good morning,

The U.S. equity markets roared ahead again yesterday will solid gains across the board.  The Dow climbed 461.46 points, or 1.70%, to finish the day at 27,572.44 – about 2,000 points shy of the high reached February 19.  The S&P 500 and the NASDAQ followed suit, gaining 38.46 and 110.86 points, or 1.2% and 1.13%, respectively.  With this recent rally, all three major U.S. equity indices have gained more than 40% since the March 23 low.

After such a powerful rally, it is not unusual that the markets are experiencing some profit taking this morning.  The Dow and S&P 500 are off about 1%, while the NASDAQ is lower by about .2%.

Stocks in Europe fell overnight on weak GDP numbers.  Germany’s DAX index declined 1.69%, France’s CAC fell 1.63% and Britain’s FTSE lost 1.87%.  Until now, Europe had been getting a boost from the successful reopening of several European economies.

There are looming concerns about the health of the global economy, as well as the depth and duration of the current recession in the U.S.  It’s anyone’s guess as to what 2nd quarter GDP will turn out to be – but in any event it will be negative – just how negative is the question.  With 1st quarter GDP reported to be -4.8%, the U.S. economy is in its first technical recession in years.  Conventional wisdom believes that the Fed’s monetary and fiscal policy efforts to revive the economy quickly will work, and by the 3rd – and certainly the 4th quarter – the recession will be behind us.

As always, please stay safe and healthy.