Market Wrap-Up (05/20–05/26)

At the close of Refinitiv Lipper’s fund-flows week, both U.S. and overseas broad-based indices ended in the black. NASDAQ (+3.30%), Russell 2000 (+2.54%), S&P 500 (+1.95%), and DJIA (+1.26%) all recorded positive performance. The tech-rich NASDAQ logged its largest weekly gain in six weeks. Overseas, broad-based indices Shanghai Composite (+3.06%), DAX 30 (+2.24%), and FTSE 100 (+0.95%) avoided losses as well. The 10-two Treasury yield spread (-6.36%) and the VIX (-17.8%) fell over the course of the week.

On Thursday, May 20, U.S. equity markets traded positive, with the NASDAQ (+1.77%) leading the way, ending a three-day slide. The 10-year Treasury yield fell 8.22% on the day, reversing its 7.29% spike the day before. Volatility in the yield curve can be attributed to the Federal Reserve’s release of its April meeting minutes which consisted of talks on slowing the asset purchasing program:

“A number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.”

Wednesday’s reaction and Thursday’s correction in Treasury yields reminded investors just how sensitive the market is to the Fed simply talking about a plan on lowering asset purchases in the future. The minutes did, however, say “the economy remained far from the Committee’s maximum-employment and price-stability goals,” which would suggest no forthcoming policy changes. The Federal Open Market Committee is looking for a string of reports much like the weekly unemployment report released Thursday that announced 444,000 Americans filed for first-time unemployment — the lowest weekly figure since the start of pandemic. On Friday, Refinitiv Proprietary Research revealed that of the 476 companies in the S&P 500 to have reported 2021 Q1 earnings, 87.2% have reported earnings above analyst expectations. U.S. broad-based equity markets traded mixed as the weekend approached and earnings season starts to come to an end.

On Monday, May 24, the NASDAQ (+1.41%) was once again the daily index winner while Treasury yields fell. U.S. COVID-19 cases and hospitalizations hit their lowest levels since June, even as restrictions and capacity limits ease. CDC reports that 62% of the U.S. adult population (18 and older) has at least one dose of the vaccine, while 50.6% are now fully vaccinated. Negative consumer sentiment and housing data led to U.S. equity markets trading in the red on Tuesday. The Conference Board released their Consumer Confidence Index and Expectation Index — both fell in May. U.S. new home sales also decreases month-over-month as their prices continue to rise.

To close our Refinitiv Lipper fund-flows week on Wednesday, the Russell 2000 (+1.97%) recorded the largest daily gain for all broad-based indices over the last five sessions. After a couple of volatile weeks in the markets, equity indices traded relatively subdued with the VIX closing at 17.46.