Oil And Equities Gain, While VIX Dropped 20% Last Week

“S&P 500 companies slashed or suspended over $40 billion in dividends in the second quarter, the deepest quarterly drop since 2009.” (Dow Jones)

Market Indexes

The market rose this holiday-shortened week, with all 4 indexes making solid gains, spurred on by upbeat economic news. In May, the US economy regained parts of the severe losses it incurred in March and April. The NASDAQ led, but was closely followed by the Russell Small Caps and the S&P 500.

Volatility

The VIX fell 20% this week, ending at $27.68, vs. $34.73 last week.

High Dividend Stocks

These high yield stocks go ex-dividend next week: BNS, BDO, CIO, KIO, LOAN, T, TD, WDR.

Market Breadth

19 out of 30 Dow stocks rose this week, vs. 9 last week. 74% of the S&P 500 rose, vs. 19% last week.

Forex

The USD fell vs. most major currencies this week, except the yen.

Economic News:

“The U.S. economy created a record 4.8 million jobs in June as more restaurants and bars resumed operations, but layoffs remained elevated and raging COVID-19 cases across the country threaten the fledgling recovery. The flare-up in coronavirus infections, which started in late June, was not captured in the Labor Department’s closely watched monthly employment report published on Thursday as the government surveyed businesses in the middle of the month.

The jump in non-farm payrolls in June was the largest since the government started keeping records in 1939. Payrolls rebounded 2.699 million in May after a historic 20.787 million plunge in April. Economists polled by Reuters had forecast payrolls increasing by 3 million jobs in June.” (Reuters)

“Total non-farm payroll employment rose by 4.8 million in June. The unemployment rate declined to 11.1%, the U.S. Bureau of Labor Statistics reported Thursday. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. In June, employment in leisure and hospitality rose sharply.

These gains reflect a partial resumption of economic activity that had been curtailed due to the coronavirus pandemic in April and March, when employment fell by a total of 22.2 million in the 2 months combined. In June, non-farm employment was 14.7 million, or 9.6 percent, lower than its February level.

Notable job gains also occurred in retail trade, education and health services, other services, manufacturing, and professional and business services.

The change in total nonfarm payroll employment for April was revised down by 100,000, from -20.7 million to -20.8 million, and the change for May was revised up by 190,000, from +2.5 million to +2.7 million. With these revisions, employment in April and May combined was 90,000 higher than previously reported.” (BLS)

“The Commerce Department said on Thursday factory orders increased 8.0% after falling 13.5% in April. Factory orders dropped 10.3% year-on-year in May. Manufacturing, which accounts for 11% of U.S. economic activity, appears to be regaining its footing, but a resurgence in coronavirus cases amid the reopening of businesses threatens the budding recovery.” (Reuters)

“Pending home sales in May spiked 44.3%, compared with April, according to the National Association of Realtors. Sales were still 5.1% lower compared against the same time last year.” (MarketWatch)

Week Ahead Highlights

It’ll be a quieter week on the economic front, with fewer reports due out. Q2 earnings season starts the following week. The resurgence in coronavirus cases in the US and other nations will most likely dominate the news and the markets.

Next Week’s US Economic Reports:

Sectors

Utilities and Basic Materials led this week, as all sectors posted gains. Financials lagged, weighed down by new Fed oversight rules. Tech and Consumer Discretionary are the year-to-date leading sectors.

Futures

Oil bounced back this week, rising 4.75%, ending at $40.28.