Stocks opened higher. The stock market took another big number for weekly jobless claims—4.4 million—in stride and engineered another welcomed positive open. One reason for the gains in stocks this morning is that oil is higher for the second straight session, based on the WTI crude futures contract for June. The market’s ability to shrug off more devastatingly bad economic data—today’s Purchasing Manager’s Indexes (PMI)—is another piece of evidence that stocks are forward looking.
Jobless claims remain elevated. 4.4 million people filed a new claim for unemployment insurance in the week ending April 18, bringing the total to 26.4 million over the last five weeks. While the abrupt rise in lost jobs is unprecedented, the number of new claims declined for the third consecutive week. We still expect most of those jobs to return as the economy rebounds, with minimal structural damage to US labor markets.
Global PMI data reveals extent of shutdown impact. The Markit “flash” PMI data for the Eurozone was consistent with the consensus view that Europe entered a deep recession in March. The composite PMI for the region fell to a shockingly low 13.5. At 10.4, the services PMI for France nearly reached single digits, far from the 50 level that marks the breakpoint between expansion and contraction. US PMIs, due later today, are expected to be in the low 30s based on Bloomberg’s consensus forecast.
What a month. A month ago today, the S&P 500 closed down 33.9% from the all-time highs in one of the most vicious bear markets we’ve ever seen. A month later, now we have one of the greatest rallies in history. In fact, over the past month the S&P 500 added 25.1%, the greatest one-month rally since 1938. Looking at other massive one-month rallies reveals surprising strength over the coming 6- and 12-month periods. We will discuss this important concept later today on the LPL Research blog.
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