- The S&P 500® was up 4.53% in May, bringing its YTD return to -5.77%.
- The Dow Jones Industrial Average® gained 4.26% for the month and was down 11.06% YTD.
- The S&P MidCap 400® increased 7.14% for the month and was down 14.50% YTD.
- The S&P SmallCap 600® returned 4.15% in May and -21.35% YTD.
The grand Reopening of the U.S. began in May—come, buy, spend (if you have it; otherwise use your stimulus money), and enjoy the solitude of six feet as you scan your iPhone to pay (or for you oldies, use that archaic piece of plastic that you have not been using lately). If by some chance you need to cough (as they told Arlo Guthrie), “turn your head.” The U.S. started to reopen as the Memorial Day holiday kicked off not just the start of summer, but a return to what will be the new normal, with no one knowing what that will be, but most wanting to at least try. The anticipated opening has been what has kept the S&P 500 up—36.06% from its recent March 23, 2020, low (down 10.10% from its Feb. 19, 2020, closing high). Anticipation has been nice (did someone say, “Buy on anticipation, sell on reality?”), but now reality will start, along with the learn-as-you-go process and slow (or fast—we don’t know) continuance of opening; the key questions are, “If you open, will they come and spend?” and, “If they come, will they get sick?” At this point, an opening, any opening, is welcome, as the Street has mostly dismissed 2020 earnings and is looking toward recovery signs, which are expected to be seen in a turn up in earnings in the second half of 2020—and that will be the true reality test for the Street. At 27.7 times the expected 2020 EPS, there is no question as to why everyone is wearing a mask, as the Street is priced for 2021 (and even then it is high). If we see the upward turn in the second half, then the current levels may be justified, but if not, the Street will need to reprice, and for those of you who quickly forget, the last repricing was from the Feb. 19, 2020, high to the March 23, 2020, low—a 33.9% fall. In the “putting your money where your mouth is” reopening, the first major IPO since the virus spread to the U.S. was done, as insurance broker SelectQuote (SLQT) IPOed at USD 20, closing the month at USD 27.52, up 37.6%—ah, the good old days.
The U.S. market went into May after its best month (12.68%) since January 1987 (13.19%), as the focus changed to the start of the Reopening of the U.S. (most started on May 18, 2020, ahead of the Memorial Day holiday), with regions varying their approach and depth. The initial key issue for the reopening in May was if consumers would come back, and June’s key issue will be if they would be safe to do so and spend.