Market Week Ahead: Stocks Post Uneven Rally After Long Weekend

May 26, 2020 - At first glance, the big rally that kicked off this week seems a lot like the big rally that kicked off last week.

Positive news about a potential coronavirus vaccine? Check

Continued headlines about economies in the U.S. and around the world reopening? Check

Dig a little deeper though and things don't seem quite so similar. The company behind this week's vaccine candidate, Novovax (NVAX) only gained about 2.5%, considerably less than the double-digit increase posted by Moderna (MRNA) last week.

Last Monday's session also ended above the day's opening price. While today's close, while higher than Friday's, was actually below the opening print.

Also worth noting, the parts of the market rising today aren't the parts that rallied last Monday. Technology, Health Care and Biotechnology all lost ground on the day, while recently battered sectors like Energy, Real Estate, Industrials (this is where the airlines live) and Financials were among the sectors posting the biggest gains on the day.

These parts of the economy will also need to be healthy for the economy to truly recover, but it is a little bit curious that the recently unloved parts of the market rose today without the recent market leaders. Combine that with today's late-day swoon and it's hard to know what to make of today. It certainly wasn't a broad-based rally, and all the gains made during the trading hours were gone by the close.

It will be interesting to see what happens as the week progresses. Economic data is going to continue to show improvement, but as we mentioned Friday, big gains from a very low base still leave us well below where we were before in terms of economic activity.

Economic Events this Week

Tomorrow's ISM number is sure to be eye-popping, but the real action this week is Friday's Employment Situation Report.

Wednesday

• 8:15 a.m. - ADP Employment Change
• 10:30 a.m. - EIA Crude Oil Inventories
• 2:00 p.m. - Federal Reserve's Beige Book

Thursday

• 8:30 a.m. - Initial Claims
• 8:30 a.m. - Durable Goods Orders
• 8:30 a.m. - Q1 GDP second estimate
• 10:00 a.m. - Pending Home Sales

Friday

• 8:30 a.m. - Personal Income and Spending
• 8:30 a.m. - PCE Prices
• 9:45 a.m. - Chicago PMI

Earnings Reports this Week

We're past the big flood of earnings season, but will still be interesting to get updates from some of these names, mostly for any hints about current business conditions and forward-looking statements.

Tuesday:

After the bell: HEI, KEYS, VSAT

Wednesday:

Before the bell: BMO, PLAB, RL, RY, VIPS After the bell: UHAL, ADSK, BEST, BOX, CACC, HPQ, NTAP, NTNX, PLT, SMTC, TOL, VRNT, WDAY

Thursday:

Before the bell: ANF, BURL, SSIQ, CM, DG, DLTR, LL, MOMO, MNRO, NIO, SAFM, SHOO, TD, TGI After the bell: COST, DELL, DXH, MRVL, JWN, OKTA, OLLI, PSTG, CRM, ULTA, VMW, WSM, ZS

Friday:

Before the bell: BIG, CGC

Sector and Industry Sentiment

As part of the upgrade and redesigned InvestorsObserver, we are now calculating a proprietary Sentiment Score for stocks. This score looks at price action, volume trends and data from the options market when available to try to get a sense of how the market feels about a stock. We're replacing the lists of sectors and industries that have performed well or poorly over various time periods with a ranking of all eleven sectors in order of sentiment and then the top ten and bottom ten industries.

Sector Sentiment

Basic Materials Healthcare Consumer Cyclical Communication Services Consumer Defensive Technology Energy Industrials Financial Services Utilities Real Estate

Top Industries

Silver Gold Other Precious Metals & Mining Recreational Vehicles Health Care Plans Home Improvement Retail Department Stores Other Industrial Metals & Minerals Drug Manufacturers - General Leisure

Bottom Industries

Confectioners Aluminum Financial Conglomerates REIT - Office Airports & Air Services REIT - Residential Beverages - Brewers Paper & Paper Products REIT - Retail Railroads