Markets “In a Nutshell” for October 13, 2020
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was up 3.27%, the S&P 500 rose 3.84 %, the New York Stock Exchange Composite (2,000 stocks) rose 3.94% and the average investors index (Value Line Index) was up 5.28%. Foreign stocks (DJ Global ex U.S.) were up 2.63%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 9 basis points higher at 0.79%. (Data source: Wall Street Journal)
Stocks Soar for the Week
Stocks soared for the second consecutive week, ending the weakest stretch the stock market had seen since the early days of the pandemic and injecting some optimism into the start of the 4th Quarter. Prompting some of the gains for the week started with the improving health of President Trump, after a tumultuous end to the previous week, and an increasing chance of some sort of government stimulus, although the likelihood of any assistance before the election has become unlikely. While the negotiations for government aid took a rollercoaster ride this week, both sides of the political aisle are becoming increasingly aware of the need for some aid as people seeking their first unemployment claim has seemingly stalled at over 800 thousand claims per week over the past month and more of the larger employers in the country are announcing layoffs. Even though the government has piled on trillions of dollars in government debt this year, the White House ended the week much more willing to spend more as the virus’ spread remains resilient. (Barron’s)
3rd Quarter Earnings Season Begins
The beginning of an important earnings season for stocks across the market starts this week and the stakes are high, with many companies, especially outside the technology sector, looking to continue to rebound from the depths of the 2nd quarter. Earnings are expected to have dropped about 22% from the same time last year, which is better than the 2nd quarter’s 32% drop, but still highlights how deep this recession truly is. Unfortunately, under the surface of those estimates shows that the majority of the earnings increases are going to be coming from the badly beaten down Energy sector and not much else from the other sectors. While most of the negative sentiment of these estimates is well known, any disappointments in these reports could spell a continuation of the volatility seen in September. (Barron’s)
What was the best performing sector in the S&P 500 for the 3rd quarter of 2020?
Have a Great Week!
1. The Consumer Discretionary sector was the best performing sector in the S&P 500 for the 3rd Quarter of 2020, returning 15.06%. (Morningstar).