What a start to the week.  The major indices began the day down before Nasdaq turned green, early on, powered by FAANG and Technology. The Nasdaq broke through the initial resistance of 8,650 again to close at 8,711. The Dow, which was lower by at least 360 points, and S&P 500 managed to reverse course and eke out gains, closing at 23,750 and 2,843, respectively, as buyers emerged in the last few minutes of trading.  These reversals are great test for the markets, which have been range bound.  But it does put a premium on picking stocks.

Six of the eleven S&P 500 sectors finished in the green, however, 3 sectors were only down fractionally, as Industrials and Financials lagged.  Once again Energy was the top performer, followed by Technology.

S&P 500 Index	+0.42%
Communication Services (XLC)	+0.58%
Consumer Discretionary (XLY)	+0.54%
Consumer Staples (XLP)		-0.05%
Energy (XLE)	+3.46%
Financials (XLF)		-0.91%
Health Care (XLV)		-0.05%
Industrials (XLI)		-1.27%
Materials (XLB)	+0.35%
Real Estate (XLRE)		-0.06%
Technology (XLK)	+1.33%
Utilities (XLU)	+0.75%

The Nasdaq advancers, highs and breadth were all positive and while negative on the NYSE, the breadth was close to balanced.  

Issues:	NYSE	NASDAQ
Advancing	1,369	1,742
Declining	1,569	1,492
52 Week High	5	19
52 Week Low	10	16
Up Volume	2.23B	2.26B
Down Volume	2.56B	1.18B

The U.S. Treasury Department is continuing its shopping and anticipates it will borrow about $2.99 trillion in debt between April and June, exceeding the initial projections announced in February, due to the actions its taking to fight the economic impact from the coronavirus.

Reopening

Many places have started to reopen, not only in the America, but across the globe.  After weeks of being sheltered in, people are beginning to dip their toe back out into the world.

Mobility Trends

Dozens upon of dozens of towns and states are at least partially open in the U.S., despite some not meeting the CDC’s first guideline for lifting the stay at home order of 14 consecutive days of a decline cases.  The Trump administration is now projecting about 3,000 deaths a day beginning in June and the president said, "We're going to lose anywhere from 75, 80, to 100,000 people," in a virtual town hall on Fox News on Sunday. "That's a horrible thing. We shouldn't lose one person over this."

But people are eager to get back outside and get back to work.  I get it. 

Micro data shows that traffic is picking up, even in places where shelter in place is still being enforced.  This has a wide variety of implications. 

Fuel demand will begin to pick up.  Today, WTI is up 10.7% to $22.59 per barrel. It was only a few days ago that the June contract dropped to $6.50 per barrel. I think the avoidance of mass transit will linger much longer.

Cars have been idle and will need up-keep. Auto demand in general will likely rise as people return to work and begin to buy new cars and trucks again. 

Yesterday, I mentioned I loved the action in the homebuilders.  I am still convinced older millennials with the wherewithal will look to move to the suburbs as an alternative to living in apartments and condos, stacked on top of each other, wondering who pressed the elevator button before your child, who just came into the building with an ice cream cone in her hand.

Getting the economy up and running again is crucial.  But, as I have said before, we must brace ourselves for the worst while we hope for the best.  The hope will come as more states reopen.  Hope does spring eternal.

Portfolio Approach

We are adding a new stock in our Hotline model portfolio to the Energy. If you are not currently a subscriber to our Hotline, contact your account representative or email us at resarch@wstreet.com.

 

Today’s Session

The major indices look to be continuing their rally this morning, as there is more and more optimism from states and business reopening.

On the economic front, the government was out with its March trade data that was inline with expectations, coming in at $44.4 billion, as exports declined more than imports increased.  February was revised to a deficit of $39.8 billion from $39.9 billion.

• Good Deficit +$4.6 billion to $65.6 billion
• Services Surplus -$0.1 billion to $21.2 billion

At 10 ET, will get the ISM for April non-manufacturing.

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