Jobs Picture Throttles Market Advance But American Airlines Flys Higher On Reported Demand

Thursday’s markets seemed to be throttled by further negative macroeconomic data including the Initial claims report for the week ending May 30, which confirmed a decline by 249k to 1.877M while the Continuing claims report for the week ending May 23 confirmed a rise by 649k to 21.487M. These reports indicated that we are experiencing a sluggish hiring environment during the reopening process. Adding to this sobering picture, we received the revised report by the BLS that indicated nonfarm business sector labor productivity declined by .9% in Q1 while unit labor costs rose more than expected by 5.1%. The U.S. trade deficit also increased to $49.4B in April.

The utilities sector was down 2% and the real estate sector was down 1.8% leading to the decline of the S&P 500 which closed down .34% at 3,112.35. Notably, the financials sector up 2.0% and the industrials sector up 1.1% had good days. The Nasdaq moved down .69% while the Russell 2000 was flat. The Dow was the lone index to mover higher bumping up .05%.

Oil prices rose another .3% to close at $37.41/bbl a rise that seems to be fueled by reopening optimism paired with reports that weekly crude inventories decreased. Oil prices are still down ~40% since the beginning of the year. Chevron (CVX) closed at $96.28/share down .93%, Exxon (XOM) closed at $49.10/share down .28% & Occidental Petroleum Corporation (OXY) closed at $15.55/share edging up .65% or nearly 20% in the last three days. 

The popular FAANG stocks ended lower as follows: Facebook (FB) closed at $226/share off 1.68%, Amazon (AMZN) closed at $2,460.60/share, down .72%,  Apple (AAPL) closed at $322.32/share down by .86%, & Netflix (NFLX) lost 1.81% closing at $414.33/share, & Alphabet (GOOG) closed at $1,412.18/share down by 1.68%.

The 2-yr US treasury yield closed flat at .19% & the 10-yr yield jumped 6 basis points ending at .82%. The U.S. Dollar Index weakened by .52% to end at 96.76. 

Gold and silver rose today. Gold prices ended at $1,712/oz (+15) while silver prices closed at $18/oz (+.08). North American silver and gold producer Hecla Mining Company (HL) closed at $3.28/share up .31% while First Majestic Silver (AG) gained 2.57% closing at $9.98/share.

MOVERS

A couple of equities from the airline industry moved significantly higher as follows:

• Shares of Boeing (BA) increased 6.4% closing at $184.30/share as reports that flight demand was coming back online as reopening steps move forward.

• Shares of American Airlines (AAL) closed at $16.74/share up a whopping 41.3% as it confirmed its plans to increase its US-based schedule this summer and reported increased demand as reopening steps continue to be taken in all 50 states. I will not be stepping inside one of those flights anytime soon as I will continue to avoid getting infected by the coronavirus, but I am excited to see others will be as the economy is coming online.

TOMORROW

Tomorrow’s significant economic data report schedule will provide the following:

• The Employment Situation Report for May
• The Consumer Credit for April

WATCH LIST

• Keep an eye on INVO Bioscience (INVO) which was recently funded and saw their 1-20 reverse split take effect Tuesday, May 26, and is trading under the symbol INVOD. They now have ~7.8M shares in this newly minted low or tight float play. Shares closed at $2.30/share up and is trading tightly with a spread that you can drive a truck through.

• I am also looking for Atossa Therapeutics (ATOS) to possibly hit us with further news regarding their now 2 COVID-19 treatment programs as early as this week. Recently ATOS announced the successful results from in vitro testing of AT-H201, Atossa’s proprietary COVID-19 drug candidate, and are seeking IRB and FDA approval to move into the clinic. ATOS also recently announced that it has begun the development of a second COVID-19 program using its proprietary drug candidate AT-301, to be administered by nasal spray as is teaming with nasal spray specialist firm Summit Biosciences. AT-301 is Atossa’s proprietary formula intended for nasal administration in patients immediately following a diagnosis of COVID-19 but who have not yet exhibited symptoms severe enough to require hospitalization. Atossa confirmed that it is intended for at-home use to proactively reduce symptoms of COVID-19 and to slow the infection rate so that a person’s immune system can more effectively fight SARS-CoV-2 (coronavirus). Atossa also intends to conduct testing to determine whether AT-301 can be used as a prophylaxis to prevent or mitigate SARS-CoV-2, with the goal that it could become a “bridge to the vaccine” and be useful in the next phase of the coronavirus pandemic. Shares of ATOS closed at $2.67/share. ATOS has approximately 9.2M shares issued and outstanding placing it in the low-float category and hit a $3.25 52-week high this year.

Lastly, please take a minute to read these recent stories related to COVID-19: 

All this mask “research” is great but does any of it work? YES, face masks do a great job of stopping a coronavirus and… 

Wasting Time on SARS-CoV-2 Testing and…

The beach will be a common destination this summer but is it safe with the COVID-19 pandemic?

Economic Reports

• On Monday, we received the following reports:
  • The ISM Manufacturing Index Report for May moved up to 43.1% but still below expansion levels as reopening continues
  • The Construction spending report confirmed a decrease of 2.9% month/month in April while total residential spending was decreased by 4.5% & total nonresidential spending declined by 1.8%
• On Tuesday, we did not receive anything of significance.
• On Wednesday, the ISM Non-Manufacturing Index report confirmed a jump to 45.4% in May from the 41.8% in April while the ADP Employment Change Report confirmed that ~2.76M private-sector jobs were lost in May significantly lower than the ~9M that was expected. The New orders for manufactured goods report also met expectations dropping 13% month/month in April. All of these led to helping investors shine further light at the end of the tunnel that you could go brighter as reopening measures push forward across the US and world.
• On Thursday, we received further negative macroeconomic data including the Initial claims report for the week ending May 30, which confirmed a decline by 249k to 1.877M while the Continuing claims report for the week ending May 23 confirmed a rise by 649k to 21.487M. These reports indicate that we are experiencing a sluggish hiring environment during the reopening process. Adding to this sobering picture, we received the revised report by the BLS that indicated nonfarm business sector labor productivity declined by .9% in Q1 while unit labor costs rose more than expected by 5.1%. The U.S. trade deficit also increased to $49.4B in April.

Investing & Inspiration

“I believe the returns on investment in the poor are just as exciting as successes achieved in the business arena, and they are even more meaningful!” -Bill Gates

“Every portfolio benefits from bonds; they provide a cushion when the stock market hits a rough patch. But avoiding stocks completely could mean your investment won’t grow any faster than the rate of inflation.” – Suze Orman

“The tax on capital gains directly affects investment decisions, the mobility, and flow of risk capital… the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” – John F. Kennedy

“If all the economists were laid end to end, they’d never reach a conclusion.
-George Bernard Shaw

“The riskiest thing we can do is just maintain the status quo.
I get up at 4:30 in the morning, seven days a week, no matter where I am in the world. I think it is important for people who are given leadership roles to assume that role immediately. What I’ve really learned over time is that optimism is a very, very important part of leadership.” Bob Iger, Ceo of Disney

“There are old traders and there are bold traders, but there are very few old, bold traders.”-Ed Seykota

“Let this scenario play out on its own, in its own fashion. As you watch it unfold, you will soon be grateful that you choose the peaceful path. Remember — those who live by the sword, die by the sword.”

“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” -Jim Cramer

“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

“Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.” -Philip Fisher

“I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.” -Richard Dennis

“The four most dangerous words in investing are: ‘this time it’s different.” -Sir John Templeton

“Money doesn’t make you happy. I now have $50 million but I was just as happy when I had $48 million.” -Arnold Schwarzenegger

Tomorrow

Tomorrow’s significant economic data report schedule will provide the following:

• The Employment Situation Report for May
• The Consumer Credit for April