US Stock Market Overview – Stocks Drop Led by Financials Following Fed Stress Test

US stocks moved lower on Friday as concerns over the spread of coronavirus reduced positive sentiment. Consumer sentiment slipped further in June according to a report from the University of Michigan. Energy shares moved lower on Friday as there was a continued decline in the number of oil and gas rigs that are actively operating. According to Baker Hughes, the U.S. rig count fell for the 16th straight week, declining by 1-rig. All sectors in the S&P 500 index were lower on Friday, led down by Financials, Utilities were the best performing sector in the S&P 500 index. For the season the large-cap S&P 500 index was down 2.4%, and for the week it was down 2.9%.

Banks Strain Under Stress Tests

Bank stocks took it on the chin following the Federal Reserves stress test which was issued after the closing bell on Thursday. The upshot is that banks will need to rerun the stress test in the fall as the results showed that most of the banks do not have the required capital to withstand a large stress event. The Fed said that banks would need to suspend buybacks, and only issue dividends directly from profits.

Consumer Sentiment Falls

Consumer sentiment declined in June as people turned more cautious about how quickly the economy will recover. The final results of the consumer-sentiment survey in June slipped to 78.1 from an initial 78.9, according to a repor from the University of Michigan.

Mortgage Forbearance Rise

Forbearance is rising as borrowers that have delayed their monthly mortgage payments due to COVID rose sharply once again. According to Black Night Data the number of active forbearance plans rose by 79,000 in the past week, erasing roughly half of the improvement seen since the peak of May 22. By comparison, the number of borrowers in forbearance plans fell by 57,000 the previous week. Increases happened every day for the past five business days. Approximately 4.7 million homeowners were in forbearance plans, allowing them to delay their mortgage payments for at least three months. This represents 8.8% of all active mortgages, up from 8.7% last week.