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Bob Carey
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  US Stock Markets Ended May 15, 2020
Posted Under: Weekly Market Commentary

 
Equities moved lower for the week on negative economic reports and Federal Reserve Chairman Jerome Powell stating additional stimulus could be needed as the outlook is "highly uncertain and subject to significant downside risks". The cautionary tone from the Fed Chairman and weak retail sales, which fell 16.4%, led to a 2.20% drop for the S&P 500 Index and a 5.42% drop for the Russell 2000 Index. Real estate was the worst performing sector as many tenants have skipped payments, especially in strip centers and traditional malls. In addition, cyclical sectors fell by more than the market as continued lockdowns have a larger impact on profits. Southwest Airlines Co., Delta Air Lines Inc. and American Airlines Group Inc. all fell by over 10% for the week after IATI projected air traffic will not return to 2019 levels until 2023. By contrast, United Natural Foods, Inc. surged after pre-announced results were significantly above the street as consumers eat more meals at home. Net income grew by 54% versus last year's quarter. Cisco Systems Inc., one of the final technology firms to report, beat expectations as work-from-home equipment and security sales buoyed the tech giant. With more than 90% of firms reporting earnings, the S&P 500 is projected to see a 16.6% drop in EPS in the first quarter, led by a 64.2% drop from the consumer discretionary sector. S&P 500 EPS is projected to trough in 2Q with a 43% decline. Looking ahead to next week, Walmart Inc. and Home Depot Inc. are set to report results. Consumer discretionary stocks are the last sector to report results as many names have off-quarter period end dates. Traders will continue to monitor the path of the virus and reopening plans across the country as lockdowns ease.
Posted on Monday, May 18, 2020 @ 8:17 AM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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