Markets Have Best Month Since 1987, But End Week On Low Note

After a disastrous first quarter of 2020, the S&P 500 finished the month of April up more than 12%, its best month since 1987. While the economy remains partially shut down due to the coronavirus (COVID-19), a big part of the market rally has been a better-than-feared first-quarter earnings season.

The S&P 500 closed Friday at 2,830.71. The Dow Jones Industrial Average closed at 23,723.69, falling about 900 points over the last two sessions.

Stocks also rallied this week on positive coronavirus trial data from Gilead Sciences GILD. On Wednesday, National Institute of Allergy and Infectious Diseases director Dr. Anthony Fauci said Gilead’s remdesivir is demonstrating a “clear-cut” positive impact on patients infected with COVID-19.

On Wednesday, the Federal Reserve reiterated its commitment to keeping interest rates at 0% for the foreseeable future. The Fed said it will continue with its current monetary policy until the U.S. economy reaches “maximum employment and price stability.”

While investors booked big gains in the month of April, the U.S. job market continues to deteriorate. On Thursday, the Labor Department reported another 3.84 million weekly unemployment benefit filings for the week ending April 24, bringing the six-week U.S. job loss total above 30 million.

Big Tech Earnings Impress

Tesla Inc TSLA was a big winner in a surprisingly strong week for tech earnings, reporting its third consecutive profitable quarter for the first time in the company’s history.

In the coming days, investors will be watching for earnings reports from oil giants Total and Marathon Petroleum on Tuesday and CVS and General Motors on Wednesday.

With roughly a quarter of S&P 500 earnings reports already in, earnings are down 15.8% on the quarter, while revenue is relatively flat at +0.1%, according to FactSet.

Economic Numbers

Investors will be closely monitoring the weekly initial jobless claims report from the U.S. Labor Department next Thursday and the April monthly jobs report from the Bureau of Labor Statistics on Friday.

“The market is going back and forth between pricing in what’s going to happen 4-6 months down the road and reconciling that with what we’re seeing now on a day-to-day basis,” said Shawn Cruz, manager of trader strategy at TD Ameritrade.

“I think markets are going to be focused on how things go with the economies that are reopening. If these economies reopen and there’s a massive spike in fatalities…all of a sudden that light at the end of the tunnel gets pushed further off into the horizon.”