The Reopening Push May Lead To A Quick Rebound Next Month


The major indices are all sporting small gains at midday following a choppy and mixed morning, as investors continue to focus on the global reopening push and the new COVIDclusters in Wuhan and South Korea. The overnight session saw another broad selloff in risk assets, not unlike yesterday, but bulls were quickly back in the driving seat, and stocks opened higher on Wall Street. Besides the fears of a second wave of infections in Asia, the rising U.S.-Chinese tensionsalso contributed to the dip, as the Trump administration blocked a government pensionfund from investing in Chinese stocks.

Q1 2020 hedge fund letters, conferences and more

The Push For Reopening

In economic news, the NFIB Small Business Index came in at 90.9, well above the consensus estimate but still below last month’s reading of 96.4. The measure hit its lowest level since 2009, but thanks to the reopening push we could see a quick rebound next month. The Consumer Price Index (CPI) and the core CPI printed at -0.8% and -0.4% respectively, with both measures missing expectations and confirming the short-term deflationary effects of the lockdowns.

Market Wrap

Dow: 24,275, + 53 or 0.2%

S&P 500: 2,932 + 2 or 0.1%

Nasdaq: 9,223, + 30 or 0.3%

Russell 2000: 1,316, - 5 or 0.4%

Market breadth has been weak this morning due to the weakness among small-caps with decliners outnumbering advancing issues by a 3-to-2 ratio on the NYSE at midday. Only 24 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 69 stocks hit new 52-week highs. The major indices have been hovering around VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to a choppy and mixed afternoon session. Although tech stocks are once again among the strongest issues, the key defensive sectors have also been pulling their weight this morning, and in light of the weakness of the Russell 2000, caution is warranted for bulls. Stay tuned!