Market Update: May 27, 2020

Memorial Day weekend reopenings and fewer restrictions reignited people’s optimism, though some packed beaches across the country also prompted public health advisories.

Another biotech company announced positive vaccine news as a potential cure for coronavirus keeps advancing.

China is stirring the pot with Hong Kong again, and it doesn’t look like it’s going to end well.

The combination of positive vaccine news and loosened restrictions as the country reopened for the Memorial Day weekend sparked a strong rally to start this holiday-shortened trading week.

New milestones have things looking like the markets may be getting ready to make a move.

Hong Kong is going to be the next flashpoint between the U.S. and China. Relations are already tense, and the coming Hong Kong crackdown will only make them worse.

The mood was really positive as we started the week a day later because of the Memorial Day holiday Monday. The optimism was fueled by positive vaccine news from Novavax and people getting out and enjoying themselves as more of the country reopened. The market was up right from the start, with the Dow moving above 25K and the S&P 500 crossing over the psychologically important 3,000 level. The Nasdaq is only a few percentage points from posting a new all-time high. It looks like the markets have made up their mind, the lockdown is winding down, people are returning to work, and life is slowly getting back to normal.

We’ve been in the same range for an extended period of time and have been awaiting the point at which the markets would advance based on improving news (vaccine success and reopening) or retreat on more bad news (continued deaths and infections and more lockdown). If you reallocated, repositioned your portfolio and reaffirmed your risk tolerance, well done! If you have not, the window is closing quickly. These 600- to 700-point daily jumps on the Dow are hard to ignore.

Volatility was down slightly and has remained below 30 for almost a week. Yields continue to rise as money comes into the stock market.

Volatility Index: 28.01 (up)
10-year Treasury: 0.69 (down)

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