Market Recap
October 19, 2020
It was a turbulent week for investors.
Waves of positive and negative news buffeted financial markets last week:
The financial sector delivered upbeat earnings news
Currently, many financial companies in the Standard & Poor’s 500 Index have reported third quarter earnings and have done better than expected. Despite upbeat earnings, some companies’ shares declined because of uncertainty about the path of economic recovery. If recovery continues, some banks may have excess reserves; however, if recovery falters and a double-dip recession occurs, banks may need to add to reserves, reported Barron’s.
Coronavirus cases surged across the United States and Europe
A rapid rise in the number of COVID-19 cases worried investors at home and in Europe. New restrictions intended to slow the spread of the virus were implemented in France and the United Kingdom. A source cited by Financial Times reported, “…economists and investors had not expected governments to allow the virus to reach the point it has now.”
Two treatment and vaccine trials paused
The surge of new cases was compounded by setbacks in the search for effective coronavirus treatments and vaccines. Two COVID-19 trials, one for a treatment and one for a vaccine, were temporarily put on hold because of safety concerns.
Retail sales were strong, but manufacturing and industrial production weren’t
Last week, economic data provided a mixed picture of the economy. On the plus side, September’s retail sales were stronger than expected despite the tapering of unemployment benefits. On the negative side, U.S. manufacturing and industrial production both came in below expectations, reported Financial Times.
The number of Americans filing for unemployment benefits increased
The number of people filing for first-time unemployment benefits was higher than expected, and higher than it had been for the past two weeks, even though California had temporarily stopped processing new claims. Almost 3 million people filed for extended benefits, meaning they’d been unemployed for 26 weeks or more. Overall, more than 25 million people relied on unemployment benefits last week.
Major U.S. stock indices eked out gains last week.
Securities offered through LPL Financial. Member FINRA/SIPC.
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* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
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* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
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* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
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* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
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* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* These views are those of Carson Coaching, and not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm.
Sources:
https://insight.factset.com/sp-500-earnings-season-update-october-16-2020
https://www.barrons.com/articles/jpmorgans-earnings-were-better-than-expected-heres-how-the-bank-did-51602589612 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/10-19-20_Barrons-JPMorgans_Earnings_were_Better_than_Expected-Heres_How_the_Bank_Did-Footnote_2.pdf)
https://www.ft.com/content/93cffd8f-84ce-4160-a22e-b7d168620875 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/10-19-20_FinancialTimes-US_and_European_Stocks_Fall_as_COVID_Cases_Climb-Footnote_3.pdf)
https://www.webmd.com/lung/news/20201013/johnson-johnson-pauses-covid-19-vaccine-trial
https://www.ft.com/content/b28b3c3a-8745-47ab-964c-20e09334a62a (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/10-19-20_FinancialTimes-Global_Stocks_Regain_Ground_as_Earnings_Results_Provide_Cheer-Footnote_5.pdf)
https://www.dol.gov/ui/data.pdf
https://www.barrons.com/articles/dow-jones-industrial-average-edges-higher-on-week-as-stock-market-navigates-mixes-messages-51602894380?mod=hp_INTERESTS_technology&refsec=hp_INTERESTS_technology (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/10-19-20_Barrons-Make_Up_Your_Mind_Already-Inside_the_Stock_Markets_Indecisive_Week-Footnote_9.pdf)
https://www.merriam-webster.com/dictionary/fungible
https://onlinelibrary.wiley.com/doi/full/10.1002/cfp2.1011
https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/partitioning/
