Citi Personal Wealth Management

“May”-terial Gains

Monthly Market Snapshot: May 2020

Highlights

Stocks across most markets experienced material gains in May with the MSCI All Country World Index posting an impressive 4.1% gain. In the United States, the S&P 500 climbed 4.5% higher while the tech-heavy NASDAQ jumped 6.8%. The NASDAQ has returned 5.8% year-to-date. Outside of the U.S., emerging markets underperformed with just a 0.6% gain. Gains in Europe and Japan were just shy of 6.0%. The 10-year U.S. Treasury yield was little changed during the month – rising just 2 basis points to 0.65% at month-end.

Massive amounts of stimulus, news on potential COVID-19 treatments, and evolving plans to reopen the economy have lifted stock prices sharply. There are early signs that the U.S. economy may have bottomed in mid-April. This may lead to a rotation into stocks that are more sensitive to the economic cycle like banks, homebuilders and small-cap shares.

On April 22nd, Citi’s Global Investment Committee (GIC) moved from a neutral weighting on U.S. small-cap and mid-cap shares to an overweight. Since making that change, the Russell 2000, which is a small-cap stock benchmark, has rallied about 18%. On the fixed income side, the GIC increased its holdings of both Eurozone and U.S. investment-grade corporate debt.