June 4, 2020

Bill Hastie |

Good morning,

An ADP employment report that showed the rate of unemployment claims is slowing was all the U.S. equity markets needed to post yet again another impressive rally yesterday.  The Dow gained 527.24 points, or 2.05%, bringing the Dow’s rally to 3.49% for the first three days of June.  The S&P 500 added 42.05 points, or 1.36%, in its longest winning streak since February.  The NASDAQ gained 74.54 points, or 0.78%, and continues to edge closer to its high reached on February 19.

Global stocks have also been rallying on news that the European Central Bank (ECB) will increase its Pandemic Emergency Purchase Programme by 600 billion euro, bringing the program’s total economic stimulus to more than 1 trillion euro.  The ECB has joined the Federal Reserve and other central banks around the world in taking action to support sagging economies due to the coronavirus pandemic.

Futures are slightly negative this morning, taking a pause from the significant rally of the last three days.  The employment report released this morning indicated that 1.88 million American workers filed unemployment claims last week, bringing the total number of claims filed to 42 million since the beginning of the coronavirus pandemic began.  This makes the ninth consecutive week unemployment claims have declined.

“May could well end up being the turning point for the viral crisis.  The month ended with the virus seemingly under control and with the economy reopening faster than expected,” wrote Brad McMillan, our chief investment officer at Commonwealth Financial Network.  “June will tell us whether that trend continues.  But right now? Things look much better than we could have expected a month ago.”