Hello and welcome to this week’s Jones Financial Blog! Our goal at Jones & Associates is to help keep you up to date with interesting current economic/market happenings as well as some proprietary portfolio happenings. Knowledge is power and thought we would share some of ours with you. Enjoy!
All data is for the week ended May 22, 2020.
Equity markets across the world were up last week and the major economies continued to reopen. The S&P 500 rose 3.27%, the Russell 2000 gained 7.87% and the NASDAQ added 3.48%. Overseas, the international developed markets index (MSCI EAFE) rose 3.30% and the emerging markets index (MSCI EM) edged up 0.49%. Small cap stocks outperformed large and mid-caps. By sector, in the U.S. industrials and energy were the best performers while consumer staples and health care were the worst performers. (1)
Interest rates crept up as values declined with the benchmark 10-year U.S. treasuries rising 2 basis points to 0.66% annually. The yield curve also rose, with 30 year treasuries rising by 5 basis points while the 2-years rose just 1 basis point.1 While rates are negative across most of Europe, we are seeing less negative rates in the key markets of Germany, Switzerland and France since the start of the month. (2)
Oil prices jumped, with West Texas Crude rising 12.6% to $33.25 per barrel. (3) Last week, the U.S. Energy Information Administration reported an inventory draw of 5 million barrels for the week of May 15. (4) A mixture of demand returning and oil rig count declining dramatically over the last year has caused oil prices to move upwards over the last few weeks. (5)
Initial jobless weekly claims rose by 2.44 million, once again a high number for a decline from the prior week as the U.S. has sharply cut into our economy in an attempt to curb the spread of Covid-19. (1)
Proprietary portfolio happenings:
D.R. Horton Inc. (DHI), a Contrarian Choice and Core Select holding, rose 14.5% last week as mortgage rates continued to drop, to 3.41% on the average contract for 30-year fixed-rate mortgages. (6)
eHealth Inc. (EHTH), a G33 holding, added 13.5% as a competitor (SelectQuote) had its initial public offering, which was very successful, highlighting the attributes of the online private insurance exchange service to individuals, families and small businesses. (7)
Planet Fitness (PLNT), a G33 holding, rose 20.3% last week as states reopened to workout facilities. (8)
Raytheon Technologies (RTX), a Contrarian Choice, G50 and Core Select holding, rose 13.8% last week as investors became more positive on the aerospace and defense industrial sub-sector following severe declines over the past four months. (8)
Did You Know? There was a prehistoric dragonfly that's wings spanned more than two feet. More than 300 million years ago, the Meganeura established itself as the largest known flying insect to ever exist on Earth. The dragonfly-like creature had a wingspan that stretched around 2.5 feet. The bugs were also big enough to hunt prey like frogs and newts, which it could eat with its teeth-like mandibles.
Sources: (1) JP Morgan Weekly Market Recap 5-26-20, (2) Trading Economics 5-26-20, (3) Oilprice.com, (4) Energy Information Administration 5-26-20, (5) Baker-Hughes Rig Counts 5-22-20, (6) Mortgage Bankers Association Weekly Survey 5-20-20, (7) SelectQuote press release 5-20-20, (8) Seeking Alpha.com 5-26-20