It was a great April for equities. Nevertheless, it has raised many important questions for investors.
Most important: do you really believe what the markets are saying? That is to say: a recovery will start like fireworks when everyone goes back to work.
Or do you believe the decisive signal of the economy instead? That the coronavirus pandemic uncovered a shaky economic base worldwide will take time to recover. And that would mean that stocks are ahead of themselves.
Robust wins in losses
The short answer: It makes sense to expect a frustratingly slow and messy recovery – and we hope you're overly pessimistic.
COMPQ Weekly
The, up 12.68% in April and up, 11.08%, recorded their best monthly gains since January 1987. The 15.45% increase was the strongest since June 2000. The jumped 15.19%, the best since October 2002.
From their lows on March 23, the S&P 500 jumped nearly 33% on April 30, while the Dow rose 33.7%, the NASDAQ recovered 34%, and increased 33%.
That said, the S&P 500, Dow and NASDAQ still ended losses in April for the year, although the NASDAQ 100 was actually 3% higher than in the year April closed. It lost all that on Friday, the first trading day of May.
Each of these benchmarks is far from its all-time high in February. In addition, the S&P 500, Dow and NASDAQ have fallen in nine of 17 weeks this year.
Sectors, supplies that were warm … and not
Energy supplies led in April, but only after oil prices slumped after an oversupply and supply collapse. struggle for who controls global energy prices. May's contract for West Texas Intermediate actually lasts for two days, which logically shouldn't happen. for June, delivery fell below $ 20 on Friday and continued to slide into futures trading on Monday.
The Energy Select Sector SPDR ETF (NYSE 🙂 rose by 31% in April. Sounds good, except it fell nearly 52% in the first quarter and fell 40% for the year.
Apache (NYSE :), one of the largest oil and gas producers, rose nearly 213% in April, but fell 84% in the first quarter.
Stocks of airlines, hotels, restaurants and travel services were slammed. Shares of American Airlines (NASDAQ 🙂 fell by 57% in the first quarter and were taken out of the NASDAQ 100 Index. Warren Buffett & # 39; s Berkshire Hathaway (NYSE 🙂 sold all of its shares in Delta Air Lines (NYSE :), Southwest Airlines (NYSE :), United Airlines (NASDAQ :), not to mention American.
To see where the market was strong, you have to look at shares in technology and communications services. And mega cap stocks, especially Microsoft (NASDAQ :), Apple (NASDAQ :), Amazon (NASDAQ 🙂 and Alphabet (NASDAQ :).
And just hot stocks, like Tesla (NASDAQ :), were up 47% for the month and 86% for the year from April 30. Even CEO Elon Musk said on the analyst call Thursday that the stock was too high; it fell by 10.4% on Friday.
The above trio of tech large caps closed the month with valuations above $ 1 trillion. Google's mom, Alphabet, had a market capitalization of approximately $ 900 billion as of Friday. Microsoft was up 13.6% this month, with Apple up 15.5%, Amazon up 26.9%, and Google up 16%.
Netflix (NASDAQ 🙂 added 11.8% for the month. Wal-Mart (NYSE 🙂 rose 8.2%, but also reached a 52-week high on April 22 of $ 133.38.
Gilead Weekly TTM
A major area of ??strength: health care stocks, especially stocks of companies that have a chance to make vaccines that can cure the coronavirus. Gilead Sciences (NASDAQ 🙂 increased by 21% during the month and increased by 24% during the year, as limited early studies with its drug brake desivir helped COVID-19 patients recover faster.
Biotech stocks generally had a strong April. It was up 15% and recovered a loss of 13.45% in March. The index rose 24.4% last year due to interest in cancer and related drugs.
April delivered flashy results for equities. As Friday's slump, along with weak energy and contract performance of US index futures ahead of Monday's open show, investors will face significant volatility when May's first trading week begins. The risks are numerous at this time:
Markets face a barrage of bad news . This week releases the monthly US report on jobs and. The economists surveyed see a staggering 21 million in April, down from about 700,000 in April. The unemployment rate can be 16%.
How are economies reopened when about 30 million people are laid off and claim unemployment benefits? The Trump administration is making states decide, and there is a strong fear that many communities are not ready, despite protests in some states where residents are required to take shelter at home. Evidence of a failed restart will come when infection and / or death rates begin to rise. For that reason, Mississippi held back on Friday.
The time it takes for an economy to run at full speed . Even if you agree to the conditions for reopening an economy, it may only operate at 90% of capacity or less, as consumers who are just coming through layoffs or business failures need time to restore their confidence.
A possible trade battle between the US and China . Part of this may be Trump's reelection trick, but part of it is because of the difficulties in getting China to recognize the corona virus early, where it appears to have originated.
The 2020 US elections probably one of the most bitter ever.
Sounds daunting, but Berkshire Hathaway's Warren Buffett expressed optimism at the company's annual meeting on Saturday, even when his company reported a loss of $ 49.7 billion for the first quarter. Most were due to the write-off of asset values ??due to the corona virus.
"We have faced more difficult problems and the American miracle, the American magic, has always prevailed," Buffett said in livestreamed comments. He clearly believes that the markets will rise again.
