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Stocks mounted a charge toward their relief rally high of 2939 on Monday, only to fall just short, closing at 2930. Sentiment, however, then took a turn for the worse, falling 3.8 percent over the subsequent two days. The VIX index of implied volatility had closed below 30 last Friday for the first time since late-February. But after edging fractionally lower on Monday, it has climbed higher this week to a level of 37 on Thursday, reflecting the return of risk-off sentiment. 

Through Friday, approximately 86% of S&P 500^® Index Q1 2020 profit reports were complete. As of the end of last week, the blended earnings per share (EPS) growth rate has declined 13.6% year-over-year on sales growth of +0.6%. With earnings reports substantially slowing down this week, and the majority of corporate first quarter results in the rearview mirror, we thought we would provide a look at how the market responded to the steepest year-over-year decline in profits since Q3 2009 — where EPS dropped 15.7%, per FactSet¹. 

Stocks shrugged off another round of abysmal economic data to post their best returns in the past four weeks. The S&P 500^® index climbed 3.5 percent, with the best daily rise occurring on Friday following the April jobs report. Despite the worst unemployment rate in the history of the record-keeping series dating back to 1948, at 14.7, it was slightly lower than expected due to a sharp decline in the participation rate and technical issues related to the classification of workers on temporary layoff due to the virus. Had those workers been properly considered unemployed, the rate would have been five percentage points higher, according to the Bureau of Labor Statistics.