John Hancock: Weekly Market Recap Week Ended June 26th
U.S. consumer spending jumped more than 8% in May, but that record monthly gain followed a record decline of nearly 13% in April. Spending also dropped sharply in March, so there’s more ground to be made up before spending returns to pre-COVID-19 levels.
The International Monetary Fund said it expects the global economy will shrink 4.9% this year—a deeper decline than the 3.0% contraction that it had predicted in April. The fund noted that social distancing and workplace safety precautions continue to weigh on economic activity, even as many businesses begin to reopen.
Into the unknown
With just a couple weeks until quarterly earnings season opens, most companies are being cautious about offering financial guidance for their second-quarter results. As of Friday, just 49 S&P 500 companies had issued earnings-per-share guidance, which is 54% below the five-year average, according to FactSet.
U.S. stock indexes retreated 2% to 3%—around the same amounts that they’d advanced in the previous week. The biggest drop came on Friday amid news about coronavirus containment and the U.S. Federal Reserve’s temporary restrictions on dividend payments and share buybacks by the nation’s biggest banks.