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While most of Europe is closed for the Mayday holiday, US investors may wish that we were closed as well.  Futures are indicating a down open as investors digest the big gains of April that followed the sharp declines of March.  While the market’s reaction to earnings season has been positive to this point, the real test will come in the coming weeks as we begin to hear more from retailers and other companies that have been especially hit hard by the economic shutdown.

Be sure to check out today’s Morning Lineup for a rundown of the latest major earnings reports from the US, economic data out of Korea and the UK, and the latest trends in the COVID outbreak on a global, national, and state by state basis.

As mentioned above, the new month isn’t getting off to a positive start as the S&P 500 tracking ETF (SPY) is poised to open down around 2% to start the month.  That doesn’t seem like an encouraging encore to April’s big gains.  Since SPY first started trading in 1993, today would be only the 17th time that it has gapped down more than 1% to start off a new month, and if current levels hold it would only be the 6th downside gap of 2% or more.

Looking back at prior 1% downside gaps to start a month, the rest of the first day’s trading is a bit of a mixed bag with SPY averaging an open to close decline of 0.2% (median: +0.12%) with gains exactly half of the time.  To find the most recent example of a 1% downside gap in SPY to start a month, you have to look no further back than last month when it gapped down 3.8% (worst ever downside gap to start a month), and then dropped an additional 0.74% from the open to close.  While it was a bad first start to the month, the S&P 500 then went on to gain 18.01% from the close on 4/1 through month-end.