Last month, the New York Fed’s monthly manufacturing index fell to its weakest level since March of 2009. Fast forward one month and the headline reading has collapsed even further and more dramatically for the US region hit hardest by COVID-19.  The April reading was forecasted to come in at -35 which would have been the lowest level ever recorded.  Instead, it surpassed that by more than two fold coming in at -78.2 and experiencing its largest monthly decline on record in the process. While a net of over three-quarters of the region’s businesses reported declining current conditions, the outlook picked up slightly from last month.  Conditions six months out rose to 7 from 1.2 last month.

With expectations and current conditions heading in opposite directions and the index for current conditions reaching such an extreme low, the spread between the two is now at its highest level ever.

Given the massive decline in the headline number, many of the individual categories of the report were equally as bad. In addition to the headline number, New Orders, Shipments, Number of Employees, and Average Workweek all are at record lows and experienced their largest m/m declines on record.  While there were no record lows for the categories on expectations, most of those same ones are around the 1st or 2nd percentile.  Additionally, plans for Capital Expenditure and Technology Spending fell by their largest amounts ever.

Demand has been in absolute free fall.  The indices for both New Orders and Shipments have experienced record declines to record lows; surpassing even those from the last recession.  More than half of responding businesses have reported that New Orders and Shipments are weaker.  Businesses do not appear to see much light at the end of the tunnel yet either. While not at absolute lows, the readings for New Orders and Shipments six months out are both in the bottom 2nd percentile of all readings and at their lowest levels since the financial crisis.

With business grinding to a halt, it appears focus has shifted from investment to simply staying afloat and cutting costs as the indices for capital expenditure, technology spending, and all tanked. For the first time since June of 2013 for Technology Spending and May of 2009 for Capital Expenditures, the NY Fed indices have tipped negative.  Both now stand at -11 indicating fewer companies are looking to expand on capital expenditures or technologies that would benefit operations.

Looking purely at recent jobless claims numbers, the employment side of this month’s Empire Fed report could not be expected to show much strength.  This month’s report showed 58.6% of responding employers reporting smaller workforces while only 3.3% saw an increase in employees.  Additionally, 64.7% of companies reported lower employee workweeks compared to 3.1% with longer workweeks. Those readings for Number of Employees and Average Workweeks at -55.3 and -61.6, respectively, are both record lows for current conditions.  As for expectations six months out, employers do not appear overly optimistic either. Although the reading on average workweek rose to 8.4, which is in the middle of the past few years’ range, expectations for number of employees fell to 5.2 which is its lowest level since August of 2016. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

With the S&P 500’s rally off of the 3/23 low continuing yesterday, a handful of stocks in the index actually made new 52 week highs!  Other than yesterday’s new highs, there are only 19 stocks in the index that have reached a 52 week high at some point since the beginning of March.  Regeneron (REGN) was one of the few stocks that rallied in that time frame on hopes that the company would develop a treatment for COVID-19.  Other than REGN, stocks in this group seem to be plays on the COVID economy including consumer staples retailers like Walmart (WMT) and Dollar General (DG) as well as plays on Americans staying at home like Netflix (NFLX) and Amazon (AMZN).

With that outperformance during the worst of the sell-off and solid gains since the March 23rd low, most of these stocks are currently mid to high single digits above their February 19th levels except for Regeneron (REGN) and Newmont (NEM) which are 30.94% and 29.72% above, respectively.

As shown in the table above, which can also be seen in the charts from our Chart Scanner below, the COVID collapse that lasted from February into March only resulted in Amazon (AMZN) reaching a 52-week low. AMZN’s 52 week low occurred on March 16th; one week before the rest of the market’s bottom.  Every other stock of those that made a new 52-high yesterday saw its 52-week low at some point in 2019.

As shown below, several of these stocks reaching 52-week highs means that they have cleared some form of significant resistance. Dollar General (DG) and Netflix (NFLX), for example, unsuccessfully tested resistance multiple times within the past year before these most recent breakouts. As for trends, each one is currently in a rough uptrend over the past six months to a year putting aside some disruption from the volatility of the recent sell-off.  Start a two-week free trial to Bespoke Institutional to access our Chart Scanner and much more.

Below is an updated look at the performance of the S&P 500 and its eleven sectors over various time periods.  From the S&P 500’s last all time high on February 19th, no sector has been hit as hard as Energy.  From those highs for the broader index, the sector had been more than cut in half by the time the S&P 500 found a bottom on March 23rd.  In the time since then, Energy has been the best performing sector having risen 44.9%.  Meanwhile, some of the best performing sectors over the past few years like Technology and Consumer Discretionary have performed essentially inline with the S&P during this rally.  Despite Energy’s outperformance off the 3/23 lows, the sector is still down 36.3% since the S&P 500’s February 19th high and is down even more YTD.  Over the past year, two year, and three year period, Energy has also been roughly cut in half.

After the huge rally we’ve seen since March 23rd, there are now four sectors that are back up on a year-over-year basis — Utilities, Health Care, Technology, and Consumer Staples.  On a two-year basis, seven of eleven sectors are now back in the green, while only three sectors are now down on a three-year basis (Energy, Industrials, and Communication Services).

The S&P 500 as a whole is now down just 2.53% year-over-year, while it’s up 6.6% over the last two years and up 21.6% over the last three years.

The Covid crash brought most sectors to some form of a multi-year low.  But with the significant bounce since 3/23 across sectors, a significant mean reversion has taken place and several sectors are now sitting more in the middle of the past few year’s range as shown in the charts below.  Meanwhile, others like Energy, Financials, Industrials, and Materials remain at the lower end of those ranges.

Even on a shorter time frame equities are simply in the middle of their ranges.  Last week, the Health Care sector finally crossed back above its 50-DMA; the first sector to do so since the Utilities sector in the first week of March. Today, the Consumer Discretionary, Consumer Staples, Health Care, Materials, and Technology sectors have all done the same but are still within 1% of their 50-DMAs except for Health Care which is 2.5% above.

The S&P 500, Communication Services, Real Estate, and Utilities are only around 2.5 or fewer percentage points away from their 50-DMAs.  But for Financials and Industrials, they are still over 8% away.  Energy still has the furthest to go currently 13.5% below its 50-DMA.  Start a two-week free trial to Bespoke Institutional to access our Sector Snapshot and much more.