The week in review – US financial markets
  • Read Time: 5 mins

Economic and political backdrop

Optimism about the gradual reopening of the global economy seemed to be the primary driver of sentiment last week. As restrictions on public gatherings continued to be lifted and retail establishments and restaurants received permission to serve customers in limited numbers, the daily number of new confirmed coronavirus cases rose moderately in some states but perhaps not as much as feared. Investors also seemed encouraged by news of human trials of a possible vaccine for COVID-19 under development by a US biotech firm.

The week’s economic reports also appeared to be less bleak than many had anticipated. April durable goods orders outside of the volatile transportation segment fell 7.4%, roughly half as much as expected. Another 2.1 million Americans filed for unemployment benefits over the previous week, which was slightly above expectations, but investors seemed reassured that the number continued to trend downward. Continuing claims for unemployment benefits also fell unexpectedly by roughly 4 million. Housing data were mixed. Sales of new homes rose at a robust pace in April, but pending home sales fell by nearly 22%, more than anticipated.

China’s passage of legislation restricting the autonomy of Hong Kong resulted in sharp criticism from US officials and appeared to drain some of the positive sentiment, particularly late in the week. Shares of social media corporations also came under pressure after President Trump threatened to tighten regulations on social media platforms following a posting of a fact-check notice regarding one of his tweets. On Thursday, the president signed an executive order accusing the platforms of engaging in “selective censorship” and calling on the Federal Communications Commission to investigate whether they were operating in “good faith.”

Equity markets

The S&P 500 was up 3.0% (-4.7% YTD), recording a second consecutive week of solid positive returns (markets were closed on Monday in observance of Memorial Day). Slower-growing value stocks again gained ground against more highly valued growth shares – the Russell 1000 Value returned 4.4% (-15.4% YTD) and the Russell 1000 Growth 2.2% (5.5% YTD) – while small-capitalisation stocks were on par with large-capitalisation stocks – the Russell 2000 returned 2.9% (-15.7% YTD).

At its peak on Thursday, the S&P 500 moved within 10% of its all-time high, pulling it out of correction territory, according to some definitions. Meanwhile, the technology-heavy Nasdaq Composite climbed within almost 3% of its February peak before falling back. Utilities stocks outperformed, while energy stocks moved lower on reports of an increase in domestic crude inventories. The price of a barrel of Brent ended the week little changed at USD 35.3.

However, year to date energy, financials and other value-oriented stocks remained far behind their growth counterparts in the wake of the pandemic. Vaccine hopes fostered strong gains in the shares of cruise lines and other travel-related stocks in the consumer discretionary sector. Communication services shares recorded a solid rise as did energy stocks with the price of a barrel of Brent ending the week at US$35.1, up from US$32.5 a week earlier. Healthcare stocks lagged.

Fixed income markets

US longer-term bond yields ended the week slightly lower as US-China tensions counterbalanced optimism about economies reopening. US 10-year Treasury yield ended the week at 0.65%.

The investment-grade corporate bond market saw steady primary market activity throughout the week, and the volume of deals exceeded expectations. New issues were generally met with solid demand, and credit spreads narrowed across most market segments.

Another week of strong inflows to high yield funds contributed to positive sentiment and helped the market absorb a heavy slate of new deals. Fallen angels – issuers that have recently lost investment-grade status – continued to perform well amid strong interest. In credit-specific news, one of the largest global car rental companies filed for Chapter 11 bankruptcy protection late the previous Friday due to travel restrictions causing a collapse in demand for its vehicles. The Chapter 11 filing allows it to continue operations as it works to pay creditors and turn its business around.


Sign up for US Equity insights from T. Rowe Price

Share this article:

Share on linkedin
Share on email

For professional clients only. Not for retail distribution.


All data and index returns cited herein are the property of their respective owners, and provided to T. Rowe Price under license via data sources including Bloomberg Finance L.P., FactSet & RIMES, MSCI, FTSE and S&P. All rights reserved. T. Rowe Price seeks to cite data from sources it deems to be accurate, but it cannot guarantee the accuracy of any data cited herein. Neither T. Rowe Price, nor any of its third-party data vendors make any express or implied warranties or representations and shall have no liability whatsoever with respect to any data and index returns contained herein. The data and index returns cited herein may not be further redistributed or used as the basis for other indices, as a benchmark or as the basis for any other financial product.

Important Information

The specific securities identified and described are for informational purposes only and do not represent recommendations.

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. 

It is not intended for distribution to retail investors in any jurisdiction.

This material is issued and approved by T. Rowe Price International Ltd, 60 Queen Victoria Street, London, EC4N 4TZ which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.

© 2020 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

You might be interested in…

See our comprehensive range of US equity funds

Thank you for registering for US equities updates. The latest insights will be sent straight to your inbox, in the meantime access our latest thinking:

Important Legal Information

This site is intended for financial intermediaries in the United Kingdom. I have read the terms detailed below and confirm that I am a financial intermediary and that I wish to proceed. By accessing this website, you consent to T. Rowe Price collecting information by way of cookies.

Information contained in the T. Rowe Price website is not intended for investors in any jurisdiction in which distribution or purchase is not authorised, including the jurisdiction of the reader of this information, where applicable. For example, the information herein is not for distribution to and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States of America to or for the benefit of United States persons.

Information obtained from this site is intended specifically for the individuals who have agreed to these Terms and Conditions and may not be redistributed without prior consent from the T. Rowe Price Legal department.

The information is designed for professional investors, including financial intermediaries or members of the media, and is published for informational purposes only. In particular, the information is directed at only informing persons falling within one or more of the following categories:

(a) A government;
(b) A bank or insurance company;
(c) A pension fund or charity;
(d) Persons whose ordinary activities involve them, as principal or as agent, in acquiring, holding, managing or disposing of investments for the purposes of a business carried on by them or whom it is reasonable to expect will, acquire, manage or dispose of investments for the purpose of such a business;
(e) Persons whose ordinary business involves the giving of advice, which may lead to another person acquiring or disposing of an investment or refraining from so doing;
(f) Representatives of the media for corporate and background information about T. Rowe Price.

Persons who do not fall into one of the above categories should not act upon the information contained herein.

Certain persons may have access to information regarding the T. Rowe Price Funds SICAV, an investment company incorporated as “Société d’Investissement à Capital Variable” (‘SICAV’) under the laws of Luxembourg and the T. Rowe Price Funds OEIC, an open-ended investment company (‘OEIC’) incorporated in England and Wales. The sub-funds referred to on the site are only offered by the current prospectus. The prospectus contains more complete information about the sub-funds, including investment objectives, charges and expenses. However, the prospectus and other information relating to the sub-funds will not be intentionally distributed to persons in any country where such distribution would be contrary to local law or regulation.

Past performance is not a guide to future performance. The value of securities and any income generated from them might decrease as well as increase. Changes in rates of exchange may also have an adverse effect on the value, price or income of securities. Investors should also be aware of the additional risks associated with investments in emerging markets, high yield securities and smaller companies.

This information herein does not constitute investment advice and the products described may not be available to or suitable for all investors. You should consider, if appropriate, obtaining independent professional advice before making an investment decision.

Unless otherwise noted, the content appearing in this Section of the T. Rowe Price website has been issued by T. Rowe Price International Ltd, 60 Queen Victoria Street, London EC4N 4TZ, which is authorised and regulated by the U.K. Financial Conduct Authority with the reference number 194667.