10|06|2020

Signs of Life | October 2, 2020

AUTHOR: Jason J. Roque, CFP®, APMA®, AWMA®
TITLE:    Investment Adviser Rep – CCO
TAGS:   S&P 500, Stimulus, COVID, Jobs, Services



Are the markets showing signs of life, or should we expect it to flat line soon?

Monday

Markets opened the week on a hot note. All three indexes rose over 1.5% on the day. Leadership was broad, but more focused within cyclical and value-based stocks, such as financials, Consumer discretionary, and energy.

Tuesday

Consumer confidence jumped and home sales numbers were up. The markets did not seem to care though. Markets shrugged off the good news and hemmed and hawed most of the day before finally landing down 0.48%. Speculation would say that markets were staying neutral ahead of what could be an eventful night for the news cycle.

Wednesday

GDP was revised up, September nonfarm payrolls outperformed, and pending home sales surged into the end of the summer. Markets surged into the end of quarter as well. The Federal Reserve Board (FRB) announced a continuance of its Q3 policy for big banks. Following a stress test in June the FRB restricted dividend payouts and share buybacks for major banks. That policy today was extended. However, It was not enough to prevent markets from rallying into the close. The S&P 500 ended the day .83% higher, the month 4.64% lower, and the quarter 8.47% higher.

Thursday

Markets rose on Thursday as hope increased that a stimulus deal may still be possible. The Surge held through the close, however after-hours news broke that negotiation parties had reached an impasse. This likely would have an underlying impact on Friday’s markets.

Friday

Markets pulled back on the news that Key leadership in the US has tested positive for COVID-19. Additionally, jobs data showed strong adds, however at a slowing pace. The unemployment rate fell to 7.9% in September, down from 8.4 last month and a peak of 14.7% this past spring.

Conclusion

In all the markets showed Signs of life last week. The S&P 500 ended up rising by 1.52% for the week even with the faulter on Friday. These mark strong signs after hitting the technical correction point a week and a half ago. Continued volatility is expected for the end of year as, Q3 earnings, GDP, federal stimulus, and Brexit still loom.

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