The major indices are all sporting modest gains at midday, with the S&P 500 and the Dow hitting fresh recovery highs again. European and Asian stocks added to their lofty weekly gains, despite the fact that China approved the new national security legislation for Hong Kong overnight. The move could lead to increased diplomatic pressure from the U.S. and could jeopardize the “phase one” trade deal between the two countries. Stocks exposed to the Chinese market remained relatively weak in early trading, and the COVID-related optimism also seems to be fading away amid fears of a secondary outbreak in South Korea.
Q1 2020 hedge fund letters, conferences and more
The Durable Goods Report And New Jobless Claims
We had a very busy morning of economic releases with the durable goods report and the weekly number of new jobless claims stealing the show. The number of claims was roughly in line with expectations, coming in near 2.1 million so the measures COVID-total is now over 40 million. Core durable goods orders fell by much less-than-expected and the headline measure was also higher than the consensus estimate. On a negative note, the first-quarter GDP print was revised unexpectedly to an annualized -5.0%, and the second-quarter print is forecast to be even worse due to the lockdowns.
Market Wrap
Dow: 25,661, + 113 or 0.4%
S&P 500: 3,050, + 14 or 0.5%
Nasdaq: 9,450, + 38 or 0.4%
Russell 2000: 1,441, + 5 or 0.4%
Market breadth has been relatively weak in early trading, with decliners outnumbering advancing issues by a 2-to-1 ratio on the NYSE at midday. Only 4 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 64 stocks hit new 52-week highs. The major indices have been trading above their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday buying pressure. Despite the rally at the level of the indices, the traditionally defensive sectors have been showing strength, while cyclical issues and the most lockdown-sensitive industries lagging behind, which warrants caution for bulls following the strong rally of the past few days. Stay tuned!
