Week 39 in Brief
How did the major indices perform?
U.S. stocks rose on Friday, but the major indices notched a fourth consecutive week of losses, except for the Nasdaq which registered some gains driven by some gains in tech stocks. Investors are worried about the economic outlook in the absence of renewed aid from Washington, the November presidential election, and rising COVID-19 infections in the U.S. and Europe.
- On Friday, the Dow Jones Industrial Average rose 358.52 points, or 1.3%, to close at 27,173.96; and the S&P 500 advanced 51.87 points, or 1.6%, to 3,298.46, well above its correction level at 3,222.76 — commonly defined as a drop of at least 10% from a recent peak — which was being watched closely by market participants, as a sign of further deterioration in equities. Meanwhile, the Nasdaq Composite closed up 241.3 points, or 2.3%, at 10,913.56 while the small-company Russell 2000 slumped 4% to 1474.91.
- For the week, the Dow was down 1.8%, and the S&P 500 lost 0.6% while the Nasdaq gained 1.1% for the week, ending three weeks of declines.
- Investors continue to watch Washington for signs of progress in long-stalled talks on another round of spending aimed at cushioning the blow of the pandemic. However, an agreement remained unclear, while jitters are rising over the prospect of a contested presidential election on Nov. 3 that could leave the outcome of the contest in limbo for weeks.
Economic Data & Policy
- Orders of durable goods rose 0.4% in August, the fourth straight gain but a more modest increase after three straight strong gains.
- Economists had forecast a 1.5% increase in orders for durable goods in August. Orders were up a revised 11.7% in July and 7.7% in June.
Stocks in focus
- On Friday, Novavax shares jumped nearly 11% after the company said Thursday it has started a final-stage study of its experimental COVID-19 vaccine in the U.K. Novavax closed trading at $113.56.
- Nike shares soared on Wednesday following an impressive fiscal 2021 first-quarter results, which saw online sales jumped 82% and sales in China up 6% while North America dropped 2%. Nike closed trading at $124.23 after rising to $130.27 on Wednesday.
- Shares of Costco Wholesale Corp dropped 1.3% despite topping earnings and revenue expectations for its fiscal fourth quarter. Costco closed trading at $342.58.
- Trevor Milton, founder and executive chairman of Nikola, resigned after an investment fund accused him of making false assertions about his company’s technology. Nikola shares dropped 24% in Thursday trading and closed the week at $19.46.
European stocks recorded their worst weekly decline since mid-June on Friday, as investors feared that the second wave of coronavirus infections will hamper economic recovery, while banking stocks sank to an all-time low.
- The pan-European Stoxx 600 dropped 0.8% to 353.55, after closing down 1% on Thursday. The Index shed 3.6% in a week dominated by concerns about new coronavirus restrictions in Europe, a faltering stock rally in Wall Street’s technology giants, and worrying economic data from both sides of the Atlantic.
- In the UK, the FTSE 100 gained 0.34%, while in Germany the DAX led the CAC 40 lower. They fell by 1.09% and 0.69% respectively.
- European banks sank to a fresh record low as investors shunned the sector hit by a cocktail of lower global borrowing costs, rising bad loans due to the economic downturn, and dirty money scandal that made it the worst performer this week.
- Automakers fell 1.4% after an industry body said British car production fell by an annual 45% in August, as the sector continues to suffer due to the fallout from the virus outbreak.
Asian markets finished mixed as of the most recent closing prices
- In Japan, the Nikkei 225 gained 0.51%, while Hong Kong’s Hang Seng led the Shanghai Composite lower. They fell 0.41% and 0.12% respectively.
Commodities and other assets
- Oil posted a weekly loss amid renewed concerns that virus surge will spark tighter lockdown measures and further stifle crude demand. U.S. oil futures (WTI) fell 6 cents, or nearly 0.2% to settle at $40.25 a barrel on the New York Mercantile Exchange while the International Benchmark Crude dropped 2 cents to end the session at $41.92 a barrel. The contract lost 2.9% this week.
- Gold futures retreated, settling $10.60 lower, down 0.6%, at $1,866.30 an ounce, on track for its worst week since March.
- Meanwhile, the yield on the 10-year Treasury note was one basis point lower at 0.656% after the durable-goods report. Bond prices move inversely to yields.
- USD gained ground on Friday and measured its biggest weekly gain since early April.
- The ICE U.S. Dollar Index, a gauge of the greenback’s value relative to its major rivals, was up 0.3% at 94.601, notching its steepest weekly climb since late April.
- On Friday, the Euro was down 0.40% at $1.1627, after hitting a roughly two-month low.
- Riskier currencies fell, with AUD lower 0.28% on the day and down around 3.6% for the week in its biggest weekly decline since the week ending March 20. NZD declined 0.08% against the greenback for the day but showing its biggest weekly dip since the week ending May 15, according to Reuters.
- The market will be kicking September - a historically tough month for markets – goodbye but October seems to be no better.
- Several earnings reports including from PepsiCo, Constellation Brands, and Micron Technology.
- South African borders open for International Flights (1st October).
- Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.