S&P 500

US Stocks Finish Week Lower as Oil-Driven Volatility Returns; More Economic Relief on the Way

The major domestic stock indexes took a hit last week as a sharp drop in crude oil prices sparked the return of market volatility after a two week absence. The selling pressure early in the week was driven by a plunge in the nearly U.S. May futures contract, which fell into negative territory for the first time, ahead of expiration. The move in the nearby futures contract sparked technical selling in the June contract, which drove it to $6.50 per barrel before buyers stepped in ahead of the weekend, calming the equity markets.

In the U.S. cash market for the week, the benchmark S&P 500 Index settled at 2836.74, down 37.82 or -1.32%. The blue chip Dow Jones Industrial Average closed at 23775.27, down 467.22 or -1.93% and the technology-based NASDAQ Composite finished at 8634.52, down 15.62 or -0.18%.

Crude Oil Source of Last Week’s Volatility

Investors are looking ahead to more oil-market induced volatility in the weeks ahead due to concerns over limited storage space brought on by the historic demand destruction caused by the coronavirus. Additionally, although the recently agreed upon OPEC+ production cuts are not supposed to start until May 1, but there are signs that some countries are already reducing supply.

This news provided some stability to crude oil prices late last week, allowing for a rebound in stocks. However, most experts agree that the oil market is still in for a world of hurt unless United States producers start to take drastic steps to reduce their own output.

Sentiment Improves After President Trump Signed another Coronavirus Relief Bill

On Friday, President Donald Trump signed a $484 billion relief bill to boost small businesses and hospitals, helping to boost investor sentiment, as Washington plans the next steps in its unprecedented attempt to rescue an economy and health-care system bludgeoned by the pandemic.

The relief package becomes the fourth passed by Congress to respond to the outbreak, with a total cost approaching $3 trillion.

More Relief on the Horizon

On Friday, House Speaker Nancy Pelosi insisted Congress would pass another bill with relief for states and municipalities. She estimated the total could be “equivalent to what we’ve done for small business,” on roughly $700 billion.

“There will be a bill, and it will be expensive,” Pelosi told reporters. “And we look forward to doing it as soon as possible because jobs are at stake, protection of our people, the health and well-being of the American people are at stake. And the sooner we get this done the better.”

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.