Market Data as of Week Ending 05/15/2020 unless noted otherwise.
Stocks retreated as investors were presented with economic data and warnings of further weakness ahead. Following three consecutive weeks of out-performance for small and medium sized businesses, they significantly lagged their larger counterparts for the week. S&P 500 companies have reported an earnings decline of more than 10% for the first quarter and analysts expect a decline of nearly 20% in calendar year 2020. Developed foreign stocks in Europe and Asia also declined during the week, but Emerging Market stocks outperformed developed foreign markets.
U.S. Treasury yields declined for the week as investors demonstrated preference for high quality over risk assets. Investment grade corporate bonds outperformed both government and high yield. Investor demand for a combination of quality and yield continues to build. Investment grade corporate bonds are yielding more than 2.5% and high yield corporate bonds are yielding more than 7.5%.
Jobless claims rose by 3 million last week, bringing the total to more than 36 million Americans who have filed initial claims for unemployment insurance since the COVID-19 crisis began. Not surprisingly, U.S. retail sales dropped 16% in April to a new record as the pandemic upended the economy. However, U.S. consumer sentiment posted a surprise increase as the University of Michigan’s preliminary index rose nearly 2 points from an eight-year low to 73.7.