Stuck in the Mud | October 23, 2020

AUTHOR: Kerry J. Hilsabeck, CFP®
TITLE:    Investment Adviser Rep
TAGS:   Unemployment, Housing & Building, Yield Curve, Manufacturing & Services, S&P 500, University of Michigan Consumer Sentiment

Markets moved like they were stuck in the mud. Is this going to continue or was it specific to this week?


Markets opened the week in the green, but quickly faded to red. Initial optimism came from corporate earnings, however, speculation over stimulus clouded the market in red. The likelihood of stimulus faded across the day as the Tuesday deadline loomed.


The stock market bounced back on Tuesday. The bounce lost steam however as the day wore on. Negotiations were scheduled for 3PM eastern, not giving the markets any time to react to results from those talks. Investor sentiment began to look as though a deal would not be reached.


Markets ebbed and flowed all day on Wednesday as speculation over a stimulus deal remained in focus. The timeline for a deal to get done before the beginning of November has eroded. Markets closed flat on speculation that a deal will not be reached. After hours reporting of earnings should spell strength for the NASDAQ on Thursday.


Jobless claims surprisingly improved to 787K and existing home sales rose a robust 9.4%. For perspective, that represents an increase in sales by 560,000! Additionally, earnings from the prior day (after hours) were impressive. Yet, markets still seesawed back and forth for most of Thursday. They ultimately came to rest on a 0.54% gain. Concerns over upcoming events, stimulus, and rising COVID cases all contributed to market conditions. Gilead sciences, Remdesivir received FDA clearance as a treatment for COVID after hours, which helped their stock performance on Friday morning.


Services data out on Friday showed unexpected strength, coming in at 56.0 when 54.6 was expected. Markets ended the week with a slight up day for Friday. This was encouraging as we headed into the weekend.


The market was pretty boring this week and ended with an overall .52% loss on the week. There was potential throughout the week, however, markets behaved as though they were stuck in the mud. Mounting COVID cases, upcoming events, and tension over stimulus have put a damper on any promising data. Expect this to continue for the next few weeks. After which, markets should be able to respond to isolated closure behavior rather than sweeping shutdowns.

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