Week 42 in Brief
How did the major indices perform?
U.S. stocks ended a volatile week with modest gains as investors analyzed economic signals and watched for progress towards additional stimulus from Washington. The major indices notched their third straight weekly gains, partly attributed to better-than-expected retail sales in September, along with an improvement in consumer sentiment.
- On Friday, the Dow Jones Industrial Average closed up 112 points, or 0.4%, at 28,606, and posted a weekly gain of just under 0.1%; the S&P 500 closed up barely positive at 3,484 and booked a weekly gain of 0.2%; while the Nasdaq Composite closed the session off 0.4% for the day but booked a weekly gain of 0.8%.
- Health care and utilities were the best-performing sectors in the S&P 500, jumping nearly more than 1% each.
- The three main equity benchmarks had been trading within shouting distance of all-time record highs but concerns about the 2020 presidential election, a lack of progress on fresh fiscal relief for American workers and businesses, and the spread of COVID-19 overseas and domestically has given pause to bullish sentiment.
- On Friday, data showing better-than-expected retail sales in September, along with an improvement in consumer sentiment, relieved some fears about a slow economic recovery; but the fight over a fresh round of stimulus and worries about the trajectory of the deadly disease limited buying sentiment.
Economic Data & Policy
- U.S. retail sales jumped 1.9% in September, easily topping a Dow Jones estimate of 0.7%, according to data released by the Commerce Department. Excluding autos, sales were up 1.5%. That’s also better than a 0.4% estimate.
- A reading on U.S. industrial production came in weaker than expected, dropping 0.6% in September, compared against an expected increase based on average economist estimates for a rise of 0.5%.
- Meanwhile, a preliminary reading of the consumer sentiment index edged up to 81.2 this month from a revised 80.4 in September, the University of Michigan said Friday.
Stocks in focus
- Boeing shares led the DJI higher, finishing nearly 2% higher after the European Union’s aviation regulator said the 737 Max is safe enough to fly again in Europe by the end of 2020, Bloomberg News reported. Boeing shares closed trading at $167.35.
- Following Boeing, shares of General Electric Co. gained 6%, as a maker of Boeing engines, giving it its highest close since June. GE shares closed trading at $7.29.
- Shares of Pfizer jumped 3.8% after the company said it would apply for emergency use of its coronavirus vaccine as soon as it reaches certain safety milestones that it expects to have in late November. Pfizer closed trading at $37.95.
- Meanwhile, Amazon shares dipped 1.9% amid concerns over the sales from the company’s Prime Day event. Amazon closed trading at $3,272.71.
- Major US banks reported better-than-expected results this week indicating an improving economy that indicates that the pandemic is different from the Great Recession, led by JPMorgan Chase and Citigroup.
- First-Citizens Banc shares and CIT Group Inc. said Friday they have agreed to an all-stock merger of equals that will create the 19th biggest bank in the U.S. by assets. Shares of First Citizens were up more than 11% and CIT’s gained nearly 27%.
- Shares of Hertz Global Holdings Inc. soared over 140% Friday after the bankrupt rental car company said it secured $1.65 billion in debtor-in-possession (DIP) financing.
In Europe, stocks closed sharply higher on Friday despite an alarming rise in cases of Covid-19 across the region, driven by optimism that US lawmakers could reach an agreement on fiscal stimulus.
- The pan-European Stoxx 600 closed up by 1.3% provisionally, its best session in nearly three weeks.
- Shares in France lead the region with the CAC 40 up 2.03% while Germany’s DAX rose 1.62% and London’s FTSE 100 up 1.49%.
- U.K. Prime Minister Boris Johnson said he would seek a no-deal Brexit unless there was a fundamental change of approach from the European Union. GBPUSD initially sank on his comments, before trading marginally higher.
- The U.K. government also announced plans to impose tougher coronavirus restrictions on London, while the French government declared a public health state of emergency earlier this week amid a surge in cases. Germany has also announced new rules to curb the spread of the virus.
Asian markets finished mixed as of the most recent closing prices.
- Hong Kong’s Hang Seng Index closed 0.9% higher and Japan’s Nikkei 225 declined 0.4%, while China’s Shanghai Composite Index finished up 0.1%.
Commodities and other assets
- Gold registered the first weekly decline in three weeks, with prices settling down 0.1% at $1,906.40 an ounce.
- Oil futures lost some ground but remained above the $40 level. West Texas Intermediate (WTI) crude for November delivery fell 8 cents, or 0.2% to settle at $40.88 a barrel on the New York Mercantile Exchange while Brent Crude prices settled on Friday to trade at $42.93 per barrel, down 0.5%. For the week, the global crude gauge lost 0.2%.
- The yield on the 10-year Treasury note was up around one basis point to 0.739% after the strong retail sales report.
- The USD index was 0.1% lower at 93.676. The index is up 0.7%, for the week, its best weekly gain in three weeks.
- The third-quarter U.S. corporate earnings reporting season which kicked off this week continues, with Netflix, Tesla, Lockheed Martin, Coca Cola, Procter & Gamble, and American Airlines among those expected.
- Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.