Monday, May 4, 2020

A Partial Reopening

Monday, May 4, 2020 - The markets kicked off the week with hopeful expectations that overall COVID-19 cases were ticking down throughout the country and reprieve from the ongoing lockdown was on the way with some parts of the country relaxing restrictions. News of a possible treatment for patients helped spark a rally for markets on Wednesday. Gilead Sciences announced that its drug, Remdesivir, had performed well in a large trial in reducing the severity of the disease.

Major indices ended slightly lower for the week after a sizable Friday selloff, partly fueled by an unexpected flare-up in the U.S.-China trade rhetoric. They were able to shake off news that first quarter GDP contracted 4.8% vs. the expected decline of -3.5% and closed out April on a high note. The markets posted their best monthly gains in decades with the Dow and the S&P 500 both charting their best monthly performance since January 1987. The Dow climbed 11.1%, and the S&P 500 rose 12.7%. The Nasdaq Composite gained 15.4% for the month, its best performance since June 2000.  The markets were also encouraged by the Fed ensuring their plan to keep rates at 0-.25% for the foreseeable future. For the week, The Dow Jones Industrial Average and the S&P 500 Index both declined -0.2%, while the Nasdaq experienced a -0.3% loss as of Friday’s close.

ETFG Equity Exposure Report - (AMZN), reported after the close of trading Thursday and beat consensus revenue expectations as shoppers increasingly turned to online purchasing amid the pandemic, keeping them away from brick and mortar stores. Amazon’s earnings fell as the company spent heavily to keep up with booming demand. Shares dropped sharply on Friday on news that the House Judiciary Committee had asked CEO Jeff Bezos to testify about allegations that the company had earlier misled Congress on how it interacted with third-party sellers on its site, leading to a painful -7.6% drop in Friday trading. Even so, digital commerce is still expected to remain a bright spot in an otherwise fragile economic recovery.  The ETFs weighted most heavily with stock are the Vanguard Consumer Discretionary ETF (VCR), the Consumer Discretionary Select Sector SPDR ETF (XLY), the VanEck Vectors/Retail ETF (RTH), the ProShares Trust Online Retail ETF (ONLN), and the ProShares Long Online/Short Stores ETF (CLIX).

ETFG Quant Movers - The ETFs that had the largest weekly change in their respective, overall ETFG Quant ratings.

ETFG Quant Winners: This week, we are highlighting the ETFs that saw the largest movement in our ETFG Quant Total Score. The ETFs with the biggest percentage increases in their ETFG Quant Total Score this week were the iPath S&P MLP ETN (IMLP), the Innovator IBD ETF Leaders ETF (LDRS), the Franklin FTSE Europe Hedged ETF (FLEH), the Global X SuperIncome Preferred ETF (SPFF), and theVictoryShares Developed Enhanced Volatility Wtd ETF (CIZ).

ETFG Quant Losers: The ETFs with the biggest percentage decreases in their ETFG Quant Total Score this week were the First Trust Preferred Securities and Income ETF (FPE), the Invesco S&P 500 Top 50 ETF (XLG), the Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE), the Elements Spectrum ETN (EEH), and the First Trust Switzerland AlphaDEX Fund (FSZ).

ETFG Weekly Select List - The five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model. After taking a beating in the preceding weeks, the energy sector emerged strong this week with production cuts beginning to take hold and U.S. Oil Price Futures rising nearly 17% by Friday’s close. The 5 ETFs in the Energy sector with the highest ratings from our ETFG Quant model include: the Invesco Dynamic Energy Exploration & Production ETF (PXE), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the First Trust Natural Gas ETF (FCG), and the Invesco S&P SmallCap Energy ETF (PSCE).

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