Weekly Market Commentary

May 26, 2020

 

The Markets

It was a good week for stock markets in the United States, but there was trouble in Asia.

U.S. stock markets rallied last week. The Dow Jones Industrial Average, Standard & Poor’s 500 Index, and Nasdaq Composite all gained more than 3 percent, reported Barron’s.

Investors had plenty of fuel for optimism early in the week. On Sunday, Federal Reserve Chair Jerome Powell struck a positive tone during his 60 Minutes interview stating, “The big thing we have to avoid…is a second wave of the virus. But if we do, then the economy can continue to recover. We’ll see GDP move back up after the very low numbers of this quarter. We’ll see unemployment come down. But I think though it’ll be a while before we feel well recovered.”

As the states and businesses are re-opening we have been increasing the stock positions in your accounts to capture some of the potential upswings that appear to be occurring.

On Monday, there was news early testing of a potential vaccine had delivered promising results, and the vaccine company’s stock shot higher. However, the report was tarnished when top executives sold shares the next day, and a respected medical website indicated the published results meant little, reported John Authors in Bloomberg Opinion.

 

How important are small businesses? In April, the Federal Reserve Bank of New York (FRBNY) surveyed U.S. small businesses. It reported, late in 2019, before the coronavirus crisis, 35 percent were healthy, 35 percent were stable, 23 percent were at risk, and 6 percent were in distress.

Having a preponderance of healthy and stable small companies is a positive economic sign because, as Lisa Beilfuss of Barron’s explained, small companies:

  • Employ about 50 percent of American workers
  • Produce about 50 percent of U.S. GDP
  • Generate 40 percent of total business revenue

Simply put, small businesses are an essential part of the American economy.

 

Focus On The Positive

“Start by doing what’s necessary, then do what’s possible, and suddenly you are doing the impossible.”      – St. Francis

Best regards,

Bill Spalding