The week on Wall Street

Upbeat comments by the Federal Reserve Chairman and more signs of an economic turnaround combined to help fuel a powerful rally in the stock market last week.

The Dow Jones Industrial Average rose 3.29%, while the Standard & Poor’s 500 advanced 3.20%. The Nasdaq Composite index climbed 3.44% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.87%.1,2,3

Stocks Cheer Fed Support

The markets surged higher to open the week, buoyed by a Sunday night “60 Minutes” interview with Fed Chair Jerome Powell, who said that the Federal Reserve would do everything necessary to support economic recovery. Rising oil prices and more states lifting restrictions added to the overall improving investor outlook.

After a day digesting those gains, stocks moved another leg higher on strong earnings from big retailers and growing optimism over the global economic recovery. Stocks drifted in the final two days of trading as investors worried about heightening tensions between the U.S. and China.

Different Views on the Economic Recovery

Treasury Secretary Steven Mnuchin and Fed Chair Powell testified last week before the Senate Banking Committee, providing Senators with two different views of the nation’s economic outlook.4

Secretary Mnuchin suggested a wait-and-see approach before moving ahead with additional fiscal measures. He wants to pause new spending in order to first assess the impact of the already-approved stimulus program. He believes that the economy will experience a “V-shaped” recovery.5

Fed Chair Powell, on the other hand, expressed worries that waiting too long for additional fiscal measures may hamper the fragile economic recovery. It was the third time in a week that the Fed Chair suggested more federal spending is needed to help the economic recovery.6

Final Thoughts

One of the challenges of assessing the U.S. economy using certain government reports, like the consumer price index or the employment report, is that they are considered “lag indicators.” Lag indicators provide good insight into where we’ve been, but are less helpful in looking at the current state of economic activity.

Looking at some “real-time” data can help investors better assess the here-and-now. For example, gasoline deliveries are trending higher, consumer confidence appears to have stabilized, and airlines are seeing more bookings. Even the supply of toilet paper seems less of a concern these days, with Google searches falling to near normal levels.7,8

We are donating weekly to help fight the coronavirus pandemic!

Here at Mahoney Asset Management we think it is important to give back and support our local communities at this time of need. As a result, this week we are donating to the Rockland Community Foundation.

Our donation is distributed across local initiatives that are directly fighting the coronavirus pandemic. Each donation is put into the Rockland Community Crisis Fund, and the following organizations are eligible to use these funds to support people in need who live in our local community; Big Brothers Big Sisters of Rockland County, Center for Safety & Change, Hillel of Rockland, Homes for Heroes, Hospice, Meals on Wheels, People to People, Pride Center of Rockland, YMCA Rockland.

All donations will assist the many Rockland County nonprofit organizations who are on the front-lines during this crisis, so if you would also like to donateand help in the fight against coronavirus, click here.

Listen to Ken’s ‘Coronavirus: Small business support’ segment on WHUD radio now!

Click here to listen to Ken’s 04/05/2020 segment to hear about the mounting unemployment numbers and what that means for the market. During the show, Ken lists options available to small businesses and how owners can go about getting support.

In this segment, Ken warns investors to be careful searching for ‘home runs’ which include companies looking to find a cure for Covid-19. Ken takes ideas from his new book ’10 Things To Do Before You Retire’ to explain why investors need to stay vigilant, and not compare this crisis to closely with 2008-09.

© Mahoney Asset Management

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