May 2nd: From FOMO to Fear - the week reviewed

April closes out a blockbuster month but a late-week pullback sees us end the week where we started

Weekly Performance

S&P 500: -0.2%

Dow: -0.2%

Nasdaq: -0.3%

Wednesday evening saw the S&P 500 up already 3.6% and set for another strong week of gains, yet 48 hours later, all major indices closed in the red. All in all it was just another whipsaw week for investors who appear stuck between FOMO (fear of missing out) on the potential rally of a lifetime, and feeling this market is underplaying the risks that lie ahead as we start to pass the peak of this pandemic. Friday was a particularly tough day for the market following disappointing updates from Amazon and Apple and a potential re-escalation in trade tensions on the cards between China and the US. Investors are now hoping next week won't continue where this week left off...won't they?

...well perhaps not. Interesting survey results from the UBS Global Wealth Survey showed that 61% of respondents are waiting for a pullback of 5%-20% before buying, whilst just 23% are happy at these levels. With so little clarity on what the world will look like in even a few months time, the potentially disappointing earnings we could hear in the coming weeks and the reopening difficulties we could face, I'm with the 61% on this one.

This week was always going to be volatile with the tech giants that have led the rally all reporting Q1 earnings. Investors were impressed by the likes of Microsoft, Alphabet and Facebook as results weren't as bad as feared, but less so by Apple and Alphabet (Google).

Your Weekly Summary:

In a week of two halves, the week started on the front foot with a rally that led to the market’s best month for over 30 years following:

• Positive news from Pharma giant Gilead after two studies showed that one of its therapies - Remdesivir - may be a viable treatment for Covid-19 patients

• The feeling the end is in sight and we may be back to normal (whatever that may look like) as an increasing number of states including Alabama, Tennessee and Texas eased lock down measures

• Solid earnings reports from the tech giants - Facebook, Microsoft and Alphabet all impressed as their Q1 performance wasn't as bad as feared

• The FED - Reinstating that it will use its powers to the “absolute limit” amidst the pandemic (Monetary support indicates market support)

However sentiment soon changed on Thursday and Friday following:

• Investors engaging in profit taking following the best month since 1984

• The US blaming China for COVID-19 and hinting at retaliation in the shape of tariffs. With the market this fragile, added complications will not be received well by investors

• Amazon and Apple disappoint with their forward guidance, as Bezos even told investors to "take a seat" for the road ahead

Where do we go from here? Well the market remains in the balance as next week the focus will be on coronavirus progress during re-openings amidst a slew of earnings from the likes of Disney, CVS and General Motors.