The S&P 500 shed 5.64% on the week! Will this continue or is there growth in our future?
Monday
Markets fell sharply to open the week, as a third wave of COVID appears to be gripping the nation. Markets took stock of what that could mean for the Q4 economy. This reaction can be largely attributed to the lack of stimulus provided in the last month. It would have helped buffer the blow of an economy that will be hobbled by the virus.
Tuesday
Markets lurched back and forth on Tuesday and ended slightly in the red for the S&P 500. Leadership was focused squarely on sectors which have been defensive as of late. These would be Communications, Technology, Gold, and Silver. This gave the NASDAQ an edge on the day rising 0.64%.
Wednesday
Volatility rose on Wednesday as the markets tumbled. The coronavirus held the focus of investors throughout the day. Many European nations are moving to lockdowns again, which also soured markets. Crude inventories rose last week as more rigs come back online in the US. This pressured oil prices lower as well.
Thursday
Markets rose 1.1% on Thursday in a nice bounce after the shocks of Wednesday. Aiding the growth was data out on how well the economy did in the third quarter. It grew by 33.1% in comparison to the previous quarter of 32% in losses. In all, it showed an almost complete return to economic activity in the third quarter. Also aiding markets was the weekly new unemployment claims which fell to 750K. Still very high, but finally falling away from the over 800K range.
Friday
Selling resumed on Friday as global cases of COVID-19 exceeded 45M. The seven-day trend now exceeds levels from July’s illness case trend. The silver lining is that the mortality rate has come down dramatically since March. This is likely as better case tracking is occurring now in comparison to the spring. This is very important as what has been learned about COVID-19 should help prevent us from seeing complete economic shutdowns again.
Conclusion
While the focus was squarely on the coronavirus this last week, it appears that the route this week was exacerbated by a lack of fiscal support. This next week should see more of the same as major events will grip attention on the news and subsequently the market. That volatility, however, should be temporal and the growth potential from anticipated stimulus in the spring is encouraging.
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