John Hancock: Weekly Market Recap Week Ended May 8th
After two modestly negative weeks, the major U.S. stock indexes regained positive momentum, posting gains ranging from roughly 3% to 6%. Overall, however, stocks have largely been in a holding pattern since mid-April, when first-quarter earnings reports began coming out.
A measure of investors’ expectations of short-term stock market volatility has pulled back sharply from the historic highs reached in March of this year. The Cboe Volatility Index recorded a 25% weekly decline, dropping to a level that’s 66% below its peak on March 16.
Historic job loss
Stocks rallied on Friday, as the monthly jobs report released that morning wasn’t quite as awful as some economists had predicted. Nevertheless, the impact from COVID-19-related job losses was devastating: The unemployment rate spiked to 14.7% in April, and the 20.5 million jobs lost marked the largest decline on record.
The economic impact from COVID-19 triggered a massive cut in analysts’ forecasts for second-quarter earnings, which will be released starting in July. Last month, analysts lowered their aggregate earnings estimate for S&P 500 companies by more than 28%, according to FactSet. It was the biggest forecast reduction since FactSet began tracking such data in 2002.