By Scotia Wealth Management - The Zukiwsky Group

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Market Watch: May 15

May 15, 2020 | 10:50 AM

Big Picture

Economic, Health Realities Weigh on N.A. Markets

Downbeat data and sobering assessments from U.S. health officials and Fed Chair Jerome Powell dragged N.A. indexes down this week, as many investors begin bracing themselves for what could be a prolonged recovery. U.S. stocks were little changed Monday, with the Dow slightly down and the S&P flat, as investors weighed the benefits of reopening the economy against the prospect of surging coronavirus infections and renewed lockdowns. One bright spot, however, was the Nasdaq, which on Monday recorded its sixth consecutive winning session, its best streak since December.

N.A. markets were down on Tuesday as the U.S. Labor Department reported that its consumer-price index fell by 0.8% last month–the largest monthly decline in the index since December 2008, due to plunging demand for gasoline and services during the lockdowns. Also adding to the negative sentiment was testimony from top U.S. health officials, who warned during a Senate hearing of the dangers of reopening the economy without a national testing strategy. By Tuesday’s close, the Dow dropped more than 450 points, while the TSX surrendered 222.

On Wednesday, the Dow tumbled more than 500 points after Fed Chair Jerome Powell revealed growing alarm about the path to recovery, calling the outlook “highly uncertain and subject to significant downside risks.” He also stressed the need for more fiscal support.

mayor hopes to meet housing minister this month

Alberta demands Ottawa back off on housing funding stripped from Red Deer

14h ago

Last seen Jan. 15

Missing: Courtney Cattleman, 17, of Maskwacis

19h ago

eyes up

Air Spray training around Red Deer Regional Airport

20h ago

Meanwhile sentiment for TSX stocks took a hit over news that Norway’s US$1-trillion wealth fund had blacklisted some Canadian energy companies for producing excessive greenhouse gas emissions. By Wednesday’s close, the TSX was down 378 points.

It was a volatile Thursday for U.S. markets as investors weighed weak economic data and rising tensions with China against the push to reopen local economies. The morning began with more dour U.S. data, with 3 million more initial jobless claims for the week ended May 9, bringing the total of newly unemployed to over 36 million. After sliding more than 400 points after the opening bell, the Dow mounted a furious comeback to end the day up more than 375 points, while the TSX ended flat.

N.A. Markets Stumble as Hopes for V-Shaped Recovery Fade

For the four days covered in this report, the Dow shed 706 points to close at 23,625, the S&P 500 dropped 78 points to settle at 2,852, while the tech-heavy Nasdaq surrendered 177 points to close at 8,944. In Canada, the TSX lost 457 points to end at 14,510.

Strategy

Operating challenges remain, but Canadian small business sentiment improved in early May

The Canadian Federation for Independent Business published the results from its May Business Barometer survey, which showed sentiment among small business improved by 7 points over the past two weeks to reach 53.2.

The index has retraced more than half of its decline in early March, climbing more than 22 points from its low of 30.8. Encouragingly, survey responses indicate firms are finding ways to cope with storefront closures and activity outlooks appear to be improving alongside more clear re-opening details.

Business sentiment across the country is showing more uniformity than previous surveys as business owners in every province save for Saskatchewan reported more upbeat sentiment. Sector results also show broad-based consistency this month, with the significant exceptions of agriculture and natural resources where sentiment continued to deteriorate.

Capacity utilization improved to 44.3% in the latest reading, still well-below normal levels, but better than the 34.7 and 39.9 per cent from early- and late-April estimates, respectively.

Hiring plans, wage and price increases, and capital expenditure intentions are each moving up, albeit at a slow place. Fourteen percent of operators reported their businesses were in good shape while more than half indicated their businesses were in bad shape. with respect to the outlook for capital spending.

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