Markets “In a Nutshell” for November 4, 2020
Investment Week at a Glance
Stocks finished down for the week. The Dow Jones Industrial Average was down 6.47%, the S&P 500 fell 5.64%, the New York Stock Exchange Composite (2,000 stocks) fell 5.84% and the average investors index (Value Line Index) was down 6.25%. Foreign stocks (DJ Global ex U.S.) were down 4.74%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 3 basis points higher at 0.88%. (Data source: Wall Street Journal)
Fear Returns to Stock Market
A host of unsurprising issues crept up on stocks this week with rising COVID-19 cases leading to widespread economic shutdowns in Europe, a failure for Congress and the White House to reach an agreement on any stimulus deal and increasing uncertainty on who will win the presidential election or how it will even play out. Company earnings that were reported last week showed mixed results overall, but some of the biggest technology companies like Microsoft, Apple and Twitter got hit harder than the rest of the market, even though they showcased an improving economy. The outlook for earnings continues to get better, but they may not be getting better fast enough to justify the high stock price rises that have occurred over the past several months. While this week’s presidential election will have everyone’s attention and will certainly affect stocks, earnings reports so far for the 3rd quarter have shown the easy gains may have already been made. (Barron’s)
Economy Shows Improvement
With the release of the estimate for 3rd Quarter GDP in the U.S. last Thursday, investors got a clearer look into just how quickly the economy is recovering in the current recession. GDP was reported to have grown at an incredible 33.1% annualized rate for the three months from July to September, mainly driven by a large rise in consumer spending and an improving outlook for businesses. Sentiment indicators for consumers and businesses both beat expectations last week, as well, and continue to show that the growth in the economy hasn’t lost steam yet. Initial unemployment claims continued to fall from previous week’s levels, but have been persistently high, despite being materially better than expectations. While the election is poised to be the biggest market moving event of the week, the jobs report on Friday will be an important indicator of the continued progress of the recovery, with an expected gain of about 650,000 jobs. (Barron’s)
In a gloomy outlook for state governments’ finances, what is the shortfall in states’ budgets estimated to be for the next 2 years?
Have a Great Week!
4. The estimate shortfall in state governments’ budgets for the next 2 years is estimated to be $430 billion. (Barron’s).