Analytics, 15 August 2020
Week 33 in Brief
How did the major indexes perform?
U.S. stocks closed lower Friday and booked weekly gains, but the trading outlook suggests it may be tough sledding ahead for investors hoping to find further gains, with the S&P 500 within a striking distance of its record close, and as stalled stimulus talks and data point to a slow and fitful economic recovery from the COVID-19 pandemic.
- The Dow Jones Industrial Average closed up 34.30 points, 0.1%, at 27,931.02, after flipping positive in the last moments of trade. the S&P 500 fell 0.58 point, or less than 0.1%, to finish at 3,372.85. The Nasdaq Composite shed 23.20 points, or 0.2%, to close at 11,019.30.
- The benchmarks gained for the week, with the Dow up 1.8% and the S&P 500 rising 0.6%. Friday’s gain turned the Nasdaq barely positive for the week, up 0.1%. The S&P 500 briefly traded above its February 19 closing high of 3,386.15 on Wednesday and Thursday but was unable to hang on for a record.
- Economic reports, including unemployment claims and retail spending, continue to suggest the economy is recovering, but at an unsteady pace as the virus fails to submit efforts to quash it throughout the country. A report on retail sales in July rose 1.2% and increased by 1.9% once stripping out for auto and gas. Meanwhile, second-quarter productivity jumped 7.3%, while second-quarter unit labor costs surged by 12.2%. Separately, a reading on industrial production rose 3% in July for the third straight monthly gain after sharp declines in March and April, the Federal Reserve reported Friday.
- Tesla announced a stock split while a California Judge ruled that Uber and Lyft must classify their drivers as employees.
European markets closed lower on Friday as investors monitored concerns over the second wave of coronavirus cases, which caused the U.K. to implement new quarantine measures. Shares in France led the region.
- The pan-European Stoxx 600 closed down 1.2%, with travel and leisure stocks dropping more than 2.3% on the back of new travel restrictions as all sectors and major bourses slid into negative territory.
- In France, the CAC 40 is down 1.58% while London’s FTSE 100 is off 1.55% and Germany’s DAX is lower by 0.71%.
- The U.K. imposed a new 14-day quarantine period on all arrivals from France from Saturday due to the rising rate of coronavirus cases in the country. The Netherlands, Malta, and Monaco were also added to the quarantine list, which already featured Spain and Belgium.
- European Union statistics agency Eurostat on Friday confirmed that the eurozone saw a 12.1% contraction in GDP (gross domestic product) in the second quarter, and experienced its worst fall in employment ever recorded. The bloc’s trade surplus surged to 21.2 billion euros ($25 billion) due to a sharp fall in imports.
- The European Commission has entered contract negotiations with U.S. pharmaceutical giant Johnson & Johnson over the purchase of 200 million doses of a potential Covid-19 vaccine to be distributed among its 27 member states.
- On Friday, Daimler shares fell after the Mercedes-Benz owner said it had agreed to a $2.2 billion settlement to settle civil investigations by U.S. authorities and class action lawsuits relating to diesel emissions issues.
Asian markets finished mixed as of the most recent closing prices.
- China’s Shanghai Composite gained 1.19%, Japan’s Nikkei 225 rose 0.17% while Hong Kong’s Hang Seng index lost 0.18%.
- Shares of KE Holdings Inc., a Chinese online property platform, soared 87% in a blockbuster public debut Thursday that raised more than $2 billion despite the imminent threat of a hostile U.S. government. KE Holdings is backed by SoftBank Group and Tencent Holdings and priced its IPO initial public offering early Thursday at $20 per American Depositary Share, above its proposed price range of $17 to $19. It sold 106 million ADS to raise $2.12 billion. Goldman Sachs led nine underwriters on the deal.
Commodities
- Oil slipped, as a report from the International Energy Agency reduced forecasts for demand. WTI crude slipped as much as 1.5%, to $41.62 per barrel. Brent crude, the international benchmark, dropped 1.1%, to $44.47 per barrel, at intraday lows.
- Gold prices notched their first weekly decline in 10 weeks with gold for December delivery down nearly 1.1%, to settle at $1,949.80 an ounce.
- Meanwhile, September silver prices dropped $1.63, or 5.9%, to end at $26.089, after surging 6.7% a day ago. Silver suffered a 5.3% weekly loss.
- The 10-year Treasury note yield on Thursday touched its highest in eight weeks. In Friday dealings, it was trading at 0.693% compared with 0.562% last Friday.
Currencies
- USD dropped on Friday, falling for 8 straight weeks, as investors looked to other currencies whose economies are currently outperforming that of the United States in terms of managing the coronavirus pandemic.
- In afternoon trading, the ICE U.S Dollar Index, a gauge of the buck against a half-dozen major rivals, was down 0.3% to 93.02.
- Meanwhile, the Euro continued its rise, up 0.2% at $1.1835, rising for eight straight weeks.
Next week
- Traders will be awaiting news on trade talks over the weekend. Senior US and Chinese officials were scheduled to meet on Saturday, but those talks were postponed, Reuters reported on Friday. No new meeting date has been set, according to the report.
- Economic Reports: NAHB Housing Market Index for Aug (Monday), the Housing Starts and Building Permits for Jul (Tuesday), initial Jobs Claim’s (Thursday).