Markets “In a Nutshell” for August 25, 2020
Investment Week at a Glance
Stocks finished with mixed results for the week. The Dow Jones Industrial Average was unchanged, the S&P 500 rose 0.72%, the New York Stock Exchange Composite (2,000 stocks) fell 0.72% and the average investors index (Value Line Index) was down 2.43%. Foreign stocks (DJ Global ex U.S.) were down 0.57%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 7 basis points lower at 0.64%. (Data source: Wall Street Journal)
Tech Powers Stocks Higher
In a mixed week overall for stocks, technology stocks saved the market once again and kept the broad S&P 500 Index positive for the week. The S&P 500 hit a record high on Wednesday, but while the index covers over 90% of the U.S. stock market, it is becoming more clear by the week that this market is being carried by only a handful of high-flying tech companies. Apple by itself was responsible for over 60% of the S&P 500’s 0.72% rise last week. While there continues to be good news in select segments of the stock market, the economy and jobs market, in particular, continue to show signs of weakness. Over 1.1 million workers filed for their initial unemployment claim, an increase over last week’s 900k number and shocking disappointment in the pace of recovery. It likely will not be until there is a significant recovery in the job market that there will be a more balanced recovery across all sectors of the stock market. (Barron’s)
Housing Market Defies Expectations
In direct contrast to the Great Recession of 10 years ago, the housing market is not only staying afloat, but by many indicators, the housing market has never been better. The National Association of Home Builder’s August housing index, a widely followed indicator of sentiment in the industry, recently shot up to match its highest level ever in indexes’ 35-year history. The reasoning behind the increase in optimism we are experiencing today clearly has to do with record low level interest rates, but also a noticeable shift in demand for suburban housing. The boom in housing is being reflected not only in home building companies, but also home improvement companies, such as Home Depot and Lowe’s. Both companies reported impressive earnings last week, but did caution that the current sentiment in housing isn’t necessarily sustainable and the boom could come to an end in the near future. (Barron’s)
Which U.S. company just became the first ever to surpass a market value of $2 trillion?
Have a Great Week!