The Bottom Line
● All four major stock market indices made record highs on Thursday, and advanced for the week. The Cboe VIX Volatility Index fell to 21.7 from 23.3 last week, and the US 10‐year Treasury yield rose 0.05% to 0.95%.
● Optimism for a new coronavirus relief bill fueled markets most of the week with lawmakers continually hinting that they were close to an agreement, but ultimately they failed to arrive at a stimulus deal by weeks end.
● The Federal Reserve promised to keep monetary policy very accommodative even as the U.S. economy improves. That pushed the DXY U.S. Dollar Index to its lowest level since April 2018.
Markets make new record highs
All four major U.S. stock indices hit all‐time highs on Thursday, but ended the week on a down note as lawmakers were unable to finalize a coronavirus relief package. It was still a positive week for most risk assets, led by smaller companies and growth stocks. The S&P 500, Dow Jones Industrial Average, Nasdaq Composite and Russell 2000 Index all hit all‐time highs Thursday despite disappointing retail sales, rising jobless claims, and reports of material foreign cyber attacks on U.S. government agencies. Never the less, investors remained optimistic that $900 billion or so would be delivered from Washington in a new COVID relief bill. That package was expected to include $300 a week in enhanced unemployment benefits, $600 stimulus checks, and $350 billion in additional aid for small businesses. Earlier in the week, the US Federal Reserve announced that they would keep interest rates unchanged and vowed to continue their bond buying program until “substantial progress” was made toward full employment and their 2% inflation target. The Conference Board’s Leading Economic Index (LEI) showed broad improvement with a seventh straight increase, but it the smallest advance in that sequence.
Digits & Did You Knows
IT HAS BEEN A WHILE ‐ Congress has passed 4 separate bills providing $2.8 trillion of pandemic relief, but the last of the 4 bills (HR 6312) was signed into law on 4/24/20 or nearly 8 months ago (source: Congress, BTN Research).
SMALL RELIEF ‐ Approximate 60% of respondents, out of 8,328 small‐business owners, said they would need an injection of capital within the next six months, according to a poll by a group advocating for small‐business relief. A bipartisan proposal for a $908 billion coronavirus‐aid package had included $300 billion for the Small Business Administration, but lawmakers are still working to hammer out a deal (source: The Wall Street Journal).
Source: Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange‐traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds may be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐YieldBond(iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 ValueETF);MidGrowth(iSharesRussell Mid‐CapGrowthETF);MidValue (iSharesRussell Mid‐Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4%Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.
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