The Markets (as of market close September 25, 2020)
The major market indexes continued their slide to begin last week. With last Monday’s losses, the S&P 500 endured its longest losing streak since February, the Dow fell 1.8%, and the Nasdaq dropped for the fifth consecutive trading session. Among market sectors, commodity, industrial, and financial shares plunged. Sobering news that the COVID-19 virus could accelerate in the fall and winter raised the prospect of further shutdowns here and abroad. On the subject of shutdowns, the government faces one following the Republicans’ rejection of a Democrat-proposed funding bill. Treasury yields sank as bond prices rose. Crude oil fell while the dollar soared to an almost six-week high.
Tech stocks and mega-cap growth shares led the market rebound last Tuesday. Each of the benchmark indexes listed here posted solid gains, with the Nasdaq leading the way after advancing 1.7%, followed by the S&P 500 (1.1%), the Russell 2000 (0.8%), the Dow (0.5%), and the Global Dow (0.0%). Crude oil prices and the dollar rose while Treasury yields sank. The market surge could be the result of investors trying to clip some bargains following the selloff. Federal Reserve Chair Jerome Powell said the economy is a long way from where it needs to be and predicted that growth would be a slow ordeal. Congress still hasn’t agreed on a stimulus package. However the House overwhelmingly passed a temporary funding bill, now headed to the Senate, which would avoid a government shutdown. British Prime Minister Boris Johnson imposed new business restrictions and recommended continuing a work-from-home policy to counter a second wave of COVID-19 in the United Kingdom.
Despite promising reports on the development of a COVID-19 vaccine, stocks slid dramatically by the close of trading last Wednesday. Among the sectors, tech stocks, energy shares, communication stocks, and mega-caps took a collective nosedive, pulling the rest of the market down as well. The Dow lost 1.9%, the small caps of the Russell 2000 gave back 3.0%, and the Global Dow sank 1.3%. The Nasdaq and the S&P 500 were closing in on correction territory after dropping 3.0% and 2.4%, respectively. Crude oil prices declined, the dollar climbed, and 10-year Treasury yields rose.
Stocks moved in the opposite direction last Thursday, posting moderate gains by the end of the day’s trading. The Nasdaq gained 0.4%, followed by the S&P 500 (0.3%) and the Dow (0.2%). The Russell 2000 was flat and the Global Dow fell 0.6%. Treasury prices climbed, pulling bond yields lower. Crude oil prices climbed above $40.20 per barrel, and the dollar fell.
The close of last week saw stocks continue to rally. Tech stocks, real estate, and mega-caps advanced. The Nasdaq climbed 2.3%, its biggest one-day jump in two weeks. Crude oil prices and Treasury yields dipped, while the dollar gained against a basket of currencies.
Equity gains at the end of the week weren’t enough to push the benchmark indexes ahead of the prior week’s closing values. Only the Nasdaq posted a weekly gain. The S&P 500, the Dow, the Russell 2000, and the Global Dow each fell. The end-of-the-week push may have been driven by dip buyers, looking for stocks with depressed values. Otherwise, there wasn’t much positive news to spur investors. After continued haggling, it doesn’t appear that Congress and the White House can agree on a stimulus package, leading some to speculate that nothing of substance will happen until after the November election. An uptick in worldwide COVID-19 cases, coupled with a lack of government aid is not an encouraging combination for investors.
Crude oil prices dipped last week, closing at $40.12 per barrel by late Friday afternoon, down from the prior week’s price of $40.84. The price of gold (COMEX) plunged last week, closing at $1,866.10, down from the prior week’s price of $1,958.10. The national average retail price for regular gasoline was $2.168 per gallon on September 21, $0.015 lower than the prior week’s price and $0.486 less than a year ago. click here for the complete report: Winthrop Partners Weekly Update 9-28-2020
Thomas Saunders is the Managing Partner of Winthrop Partners. Prior to founding Winthrop Partners, Tom was Senior Vice President at what is now JP Morgan. His career includes senior and executive roles at Brown Brothers Harriman and First Niagara Bank, a top 25 Bank. Click here to contact Thomas Saunders about your investment and planning requirements.