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Weekly Market Insights

The Markets (as of market close October 23, 2020)

Last week started out poorly for equities as investors saw the faint hope of pre-election financial stimulus fade. The major indexes fell to their lowest levels in nearly two weeks by the close of trading last Monday. The Nasdaq and S&P 500 each dropped 1.6%, respectively. The Dow fell 1.4%, the Russell 2000 dipped 1.2%, and the Global Dow lost 0.4%. Treasury bond prices fell, driving yields higher. Crude oil prices and the dollar also lost value. All of the major market sectors closed in the red with energy, information technology, financials, real estate, and health care each falling by at least 1.5%.

Equities rebounded last Tuesday. Investors may have been looking to scoop up some discounted stocks or were encouraged by a glimmer of hope for fiscal stimulus before the election. In any case, each of the benchmarks posted moderate gains, led by the S&P 500 (0.5%), followed by the Dow (0.4%), the Global Dow (0.4%), the Nasdaq (0.3%), and the Russell 2000 (0.3%). Treasury yields and crude oil prices rose while the dollar fell. Among the major market sectors, energy, communication services, consumer discretionary, financials, and real estate were solid. COVID-19 news was mixed with the number of confirmed cases rising, countered by encouraging vaccine reports.

The prior day's market rebound was short lived as stocks fell last Wednesday. While Democrats and the White House seemed to near a fiscal stimulus package, it does not appear that anything will happen before the November election. The major market indexes ended a volatile day finishing lower, led by the Russell 2000 (-0.9%), followed by the Dow (-0.4%), the Nasdaq (-0.3%), the S&P 500 (-0.2%), and the Global Dow (-0.2%). Most of the major market sectors fell, with energy dropping nearly 2.0%. Crude oil and the dollar lost value while Treasury yields rose.

Investors continue to be influenced by reports emanating from the ongoing negotiations over additional virus-related fiscal stimulus. This time, it was House Speaker Nancy Pelosi who told reporters last Thursday that a deal is "just about there." That encouraging piece of news was enough to send stocks higher, with each of the benchmark indexes listed posting gains. Treasury yields also rose as bond prices slipped. Crude oil prices jumped 1.6%, and the dollar gained against a basket of currencies. Energy, financials, utilities, and health care gained on the day, while tech stocks fell.

Stocks were mixed by the close of trading last Friday. Poor performance from energy and technology offset strength in financials, materials, health care, and consumer discretionary. The Dow fell 0.1%, while the remaining benchmark indexes gained value, led by the Russell 2000 (0.6%), followed by the Global Dow (0.6%), the Nasdaq (0.4%), and the S&P 500 (0.3%). Treasury yields fell, pulled down by rising bond prices. Crude oil prices dropped 2.2% on the day, and the dollar fell. Investors were apparently unaffected by a lack of movement on the fiscal stimulus talks and last Thursday nights presidential debate.

Stimulus rhetoric aside, earnings reporting season is in full force and the results have been mixed, which certainly impacted stock values. For the week, the major indexes were mixed with the Global Dow and the Russell 2000 posting moderate gains, while the Dow, the Nasdaq, and the S&P 500 lost value. Year to date, the Dow fell below its 2019 closing value leaving only the Nasdaq and the S&P 500 ahead of their respective year-end marks.

Crude oil prices fell last week, closing at $39.75 per barrel by late Friday afternoon, down from the prior week's price of $40.75 per barrel. The price of gold (COMEX) closed the week at $1,904.90, up from the prior week's price of $1,901.90. The national average retail price for regular gasoline was $2.150 per gallon on October 19, $0.017 lower than the prior week's price and $0.488 less than a year ago.

Market/Index

2019 Close

Prior Week

As of 10/23

Weekly Change

YTD Change

DJIA

28,538.44

 28,606.31 28,335.57

-0.95%

-0.71%

Nasdaq

8,972.60

11,671.56 11,548.28 -1.06%  28.71%

S&P 500

3,230.78

3,483.81

3,465.39

-0.53% 7.26%

Russell 2000

1,668.47

1,633.81

1,640.50 0.41%
-1.68%

Global Dow

3,251.24 3,044.30 3,071.74
0.90% -5.52%

Fed. Funds target rate

1.50%–1.75%

0.00%–0.25%

0.00%–0.25%

 0 bps

-150 bps

10-year Treasuries

1.91%

0.74%

0.84%

10 bps

-107 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic Headlines

  • The housing sector continued its strong showing in September. According to the Census Bureau, building permits were 5.2% above their August rate and 8.1% higher than September 2019. Housing starts last month were 1.9% above August and 11.1% more than last September. Housing completions soared in September, vaulting 15.3% over their August totals and 25.8% over September 2019. Low interest rates have helped drive new home construction and add to the number of new homes available for sale.
  • Existing home sales grew for the fourth consecutive month in September. According to the National Association of Realtors®, sales of existing homes were 9.4% above the August rate and 20.9% ahead of September 2019. The median existing-home price for all housing types in September was $311,800, 0.4% higher than the August price of $310,600, and 14.8% above the September 2019 price ($271,500). Inventory of existing homes for sale fell 1.3% in September from the prior month. Unsold inventory sits at a 2.7-month supply. Sales of single-family homes also advanced last month, outpacing the August rate by 9.7%. Single-family home sales were up 21.8% over the last 12 months. The median existing single-family home price was $316,200 in September, up 0.4% ahead of the August price of $315,000, and 15.2% higher than the price in September 2019.
  • For the week ended October 17, there were 787,000 new claims for unemployment insurance, a decrease of 55,000 from the previous week's level, which was revised down by 56,000. According to the Department of Labor, the advance rate for insured unemployment claims was 5.7% for the week ended October 10, a decrease of 0.7 percentage point from the prior week's rate, which was revised down by 0.4 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended October 10 was 8,373,000, a decrease of 1,024,000 from the prior week's level, which was revised down by 621,000. For perspective, a year ago there were 213,000 initial claims for unemployment insurance, the rate for insured unemployment claims was 1.2%, and 1,691,000 people were receiving unemployment insurance benefits.

Eye on the Week Ahead

The last week of October brings with it plenty of important economic reports that can move the market. The first estimate of the third-quarter gross domestic product is available. The economy contracted at an annual rate of 31.4% in the second quarter, largely due to the impact of COVID-19. At the end of this week, the latest information on personal income, expenditures and consumer prices for September is released. Personal income dropped 2.7% in August, while prices for consumer goods and services inched up only 0.3%.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Market summaries contain information on the Dow, S&P 500, NASDAQ, Russell 2000, Global Dow, Federal Funds interest rate, and 10-year Treasury yields, as well as highlights of past and future economic data.

The Markets (as of market close October 16, 2020)

Each of the benchmark indexes listed here advanced last Monday, climbing to their highest levels in more than a month. The Nasdaq advanced 2.6%, the S&P 500 gained 1.6%,the Dow added 0.9%, the Russell 2000 increased 0.7%, and the Global Dow picked up 0.7%. The Treasury market was closed for the Columbus Day holiday. Crude oil prices fell and the dollar was mixed. Mega-caps and tech stocks were big risers, along with communication services, consumer discretionary shares, and financials.

Stocks fell last Tuesday on dampened stimulus hopes. The Global Dow dropped 0.9%, followed by the Russell 2000 (-0.7%), the S&P 500 (-0.6%), the Dow (-0.6%), and the Nasdaq (-0.1%). Treasury yields fell while crude oil prices and the dollar rose. Real estate and financials fell sharply as bank stocks dropped nearly 3.0%.

Equities continued to slide last Wednesday following more rhetoric downplaying the prospects for a stimulus deal in the near term. Lower third-quarter earnings figures from some big banks added to investors' trepidations. By the close of trading last Wednesday, the Russell dropped 0.9%, the Nasdaq fell 0.8%, the S&P 500 declined 0.7%, the Dow lost 0.6%, and the Global Dow gave back 0.4%. Treasury yields sank as bond prices increased. Crude oil prices advanced for the second consecutive day while the dollar weakened. Most of the major sectors were hit hard last Wednesday, with the largest declines in consumer discretionary stocks, communication services, and real estate.

Last Thursday proved no better for stocks, marking the third consecutive day of declines. Of the indexes listed here, only the Russell 2000 posted a gain (1.1%). The Global Dow fell 1.0%, followed by the Nasdaq (-0.5%), the S&P 500 (-0.2%), and the Dow (-0.1%). Ten-year Treasury yields advanced, crude oil prices dropped, and the dollar was mixed. Investors pulled back from technology stocks and FAANGs following news of stiffening COVID-related lockdowns in Europe and increasing unemployment claims in the United States. Market sectors that fell last Thursday include health care, communication services, information technology, and materials.

Stocks were mixed last Friday as the Dow, the S&P 500, and the Global Dow posted marginal gains, while the Nasdaq and the Russell 2000 lost value. Treasury yields climbed, crude oil prices dropped, and the dollar was mixed. Shares of large technology companies and energy stocks plunged. Investors got more discouraging news on possible virus relief from Democrats and Republicans, as it appears nothing of substance will happen until after the November 3 election.

For the week, the Dow, the Nasdaq, and the S&P 500 posted moderate gains, while the Global Dow and the Russell 2000 lost value. Year to date, the Nasdaq is more than 30.0% higher than its 2019 closing mark, pushed higher by mega-tech stocks. The S&P 500 is nearly 8.0% ahead of last year's pace, while the Dow is barely above the break-even point.

Crude oil prices inched higher last week, closing at $40.75 per barrel by late Friday afternoon, slightly ahead of the prior week's price of $40.54. The price of gold (COMEX) fell following two consecutive weeks of increases, closing at $1,901.90, down from the prior week's price of $1,934.20. The national average retail price for regular gasoline was $2.167 per gallon on October 12, $0.005 lower than the prior week's price but $0.462 less than a year ago.

Market/Index

2019 Close

Prior Week

As of 10/16

Weekly Change

YTD Change

DJIA

28,538.44

 28,586.90 28,606.31

0.07%

0.24%

Nasdaq

8,972.60

11,579.94 11,671.56 0.79% 30.08%

S&P 500

3,230.78

3,477.14

3,483.81

0.19% 7.83%

Russell 2000

1,668.47

1,637.55

1,633.81 -0.23%
-2.08%

Global Dow

3,251.24 3,073.41 3,044.30
-0.95% -6.36%

Fed. Funds target rate

1.50%–1.75%

0.00%–0.25%

0.00%–0.25%

 0 bps

-150 bps

10-year Treasuries

1.91%

0.77%

0.74%

-3 bps

-117 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic Headlines

  • The Consumer Price Index climbed 0.2% in September after advancing 0.4% in August. Over the past 12 months, the CPI has increased 1.4%. Prices for food did not change last month. Energy prices increased 0.8% in September, driven by a 4.2% jump in natural gas prices. Prices at the pump inched ahead 0.1%. Prices for used trucks and cars rose 6.7% in September after advancing 5.4% in August. Consumer prices, less the more volatile food and energy components, increased 0.2% in September and are up 1.7% over the last 12 months.
  • According to the latest information from the Bureau of Labor Statistics, the Producer Price Index advanced 0.4% in September after climbing 0.3% in August. Producer prices are up 0.4% for the 12 months ended in September. Prices for services rose 0.4% last month, pushed higher by a 3.9% increase in prices for traveler accommodation services. Prices for goods also increased 0.4% in September, led by a 14.7% price jump for iron and steel scrap. Food prices rose 1.2% and trade prices inched up 0.2% last month. On the other hand, gasoline prices fell 2.8% in September.
  • Sales at the retail level increased by 1.9% in September following a 0.6% jump in August. Retail sales are 5.4% above the September 2019 pace. Motor vehicle and parts dealers saw sales climb 3.6% last month, while sales at clothing and clothing accessories stores surged 11.0%. Sales at food services and drinking places increased 2.1%. Nonstore (online) retail sales increased 0.5% last month after soaring 23.8% in August.
  • Prices for U.S. imports increased 0.3% in September following an advance of 1.0% in August. Despite the recent increases, overall import prices declined 1.1% for the year ended in September. Import fuel prices fell 2.9% in September following a 3.9% increase in August. The September fuel price decrease was the first since April. Nonfuel import prices advanced 0.6% in September following a 0.7% rise in August. Rising prices for nonfuel industrial supplies and materials; foods, feed, and beverages; automotive vehicles; consumer goods; and capital goods contributed to the advance in nonfuel import prices. Export prices advanced 0.6% in September after climbing 0.5% the previous month. Export prices are down 1.8% from September 2019. Agricultural export prices rose 2.7% in September following a 2.3% decrease the previous month. The September increase was the largest one-month advance since the index rose 3.8% in December 2018. Nonagricultural export prices advanced 0.3% in September after rising 0.8% in August. Even with the recent increases, nonagricultural export prices decreased 2.2% for the year ended in September.
  • Industrial production fell 0.6% in September, its first decline after four consecutive months of gains. The index increased at an annual rate of 39.8% for the third quarter as a whole. Although production has recovered more than half of its February to April decline, the September reading was still 7.1% below its pre-pandemic February level. Manufacturing output decreased 0.3% in September and was 6.4% below the February level. The output of utilities dropped 5.6% as demand for air conditioning fell more than usual in September. Mining production increased 1.7% in September; even so, it was 14.8% below a year earlier. Overall, total industrial production was 7.3% lower in September than it was a year earlier.
  • The government deficit for September, the last month of the fiscal year, was $125 billion. Monthly receipts totaled $373 billion while monthly expenses were $498 billion. The total deficit for fiscal year 2020 was a record-setting $3.132 trillion, an increase of 218% from fiscal year 2019. Expenditures increased 47% while receipts fell 1.0%. The extraordinary annual deficit pointed to large expenditures for COVID-19 relief.
  • For the week ended October 10, there were 898,000 new claims for unemployment insurance, an increase of 53,000 from the previous week's level, which was revised up by 5,000. According to the Department of Labor, the advance rate for insured unemployment claims was 6.8% for the week ended October 3, a decrease of 0.9 percentage point from the prior week's rate, which was revised up by 0.2 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended October 3 was 10,018,000, a decrease of 1,165,000 from the prior week's level, which was revised up by 207,000. For perspective, a year ago there were 218,000 initial claims for unemployment insurance, the rate for insured unemployment claims was 1.2%, and 1,689,000 people were receiving unemployment insurance benefits.

Eye on the Week Ahead

The housing sector is in the news this week, with the latest reports from September available. The number of building permits issued and housing starts slowed in August compared to the prior month. The September numbers are expected to show a slight increase over the August totals. Sales of existing homes have surged over the past several months. Total sales jumped in August jumped 2.4%. A similar increase is expected for September.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment. 

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Market summaries contain information on the Dow, S&P 500, NASDAQ, Russell 2000, Global Dow, Federal Funds interest rate, and 10-year Treasury yields, as well as highlights of past and future economic data.

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