Week 43 in Brief
How did the major indices perform?
U.S. stocks closed the week mostly higher, even as the Dow and S&P 500 snapped a three-week winning streak and the Nasdaq posted its first weekly loss in five weeks. Investors remained concerned about fading hopes for another stimulus package from Washington.
- On Friday, the Dow Jones Industrial Average lost 28.09 points, or 0.1%, to close at 28,335.57, weighed down by a 10.6% drop in shares of Intel Corporation; the S&P 500 rose 11.90 points, or 0.3%, to end at 3,465.39; while the Nasdaq Composite gained 42.28 points, or 0.4%, finishing at 11,548.28.
- For the week, the Dow lost 1%, the S&P 500 shed 0.5%, and the Nasdaq dropped 1.1%. The small-cap Russell 2000 gained 0.4% during that time, continuing a recent trend of outperforming the larger-stock indexes.
- The White House and House Speaker Nancy Pelosi remain upbeat publicly about the prospects for another fiscal stimulus package, which appears unlikely before the elections on Nov. 3.
- The second and final head-to-head debate between Democratic challenger Joe Biden and President Donald Trump on Thursday night had little effect on markets, with the incumbent also highlighting challenges in getting a fiscal aid bill going.
- Biden continued to lead Trump in the polls but has seen his advantage narrow somewhat in general election polls from RealClearPolitics. His advantage in polls tracking so-called battleground states, which could ultimately decide the election outcome, has edged up to 5.1 percentage points from 4.9.
- In Vaccine news, positive news on the COVID-19 treatment front may have provided some support for stocks. The Food and Drug Administration on Thursday approved Gilead Sciences Veklury for patients who had been hospitalized with COVID-19. The drug, until now called remdesivir is the first COVID-19 therapy to receive full FDA approval during the pandemic through the World Health Organization says the drug has a limited effect on patients’ chances of survival.
Economic Data & Policy
- The U.S. IHS Markit PMI indexes for both the service and manufacturing sides of the economy rose in October, showing the fastest rate of expansion in 20 months, but companies acted cautiously with coronavirus still spreading and the presidential election potentially trigging a major shift in business rules.
Stocks in focus
- American Express Co. shares fell 3.6%, closing at $100.98, after the credit card and travel services company reported a third-quarter profit that disappointed compared with expectations, but revenue topped forecasts;
- Shares of Mattel Inc. surged 9.6%, closing at $14.16 after its third-quarter earnings topped estimates and the toy company forecast a strong holiday season.
- Shares of Hubbell Inc rallied 2.5%, closing at $153.39 after the maker of electrical and utility products raised its dividend by 7.6% and approved a new $300 million stock buyback program.
- Shares of Intel Corp. fell 10.6%, closing the week at $48.20 Friday after the company late Thursday said revenue sank more than expected in the third quarter as sales of server chips suffered.
- It was a tough week for the tech sector, falling more than 2%, amid concerns that a Democratic sweep on Nov. 3 could put pressure on the high-flying stock group. The Justice Department also filed its long-anticipated antitrust lawsuit against Google, which could impact other similar companies.
European markets closed the week on a strong note as investors monitored signs of progress toward a U.S. stimulus deal and digested a raft of major corporate earnings.
- The pan-European Stoxx 600 provisionally closed about 0.5% higher, with banks jumping over 2.5% on the back of strong earnings to lead the gains while retail stocks slumped around 0.9%.
- In London, the FTSE 100 closed up 1.29% while France’s CAC 40 was up 1.20% and Germany’s DAX is up 0.82%.
- The U.K. and European Union ramped up daily talks on Thursday as time ticks away for both sides to agree on a post-Brexit trading arrangement.
- On the data front, the flash eurozone PMI composite output index, which looks at activity in both manufacturing and services sectors, dropped to a four-month low in October to 49.4, versus 50.4 in September. A reading below 50 represents contraction in activity.
- In stocks, Barclays on Friday reported a net profit of £611 million ($797.7 million) for the third quarter, more than double analyst expectations of £273.5 million, in part due to a sharp reduction in coronavirus-related impairment charges. Barclays shares added over 8% by the afternoon, leading a broad rally for banks.
- Meanwhile, Daimler raised its 2020 profit outlook on Friday as strong third-quarter demand in China helped boost margins at its Mercedes-Benz cars division. The German automaker’s shares edged slightly higher, closing trading at EUR48.40.
Asian markets finished mixed as of the most recent closing prices.
- Hong Kong’s Hang Seng gained 0.54%; the Japanese Nikkei 225 rose 0.18%; while China’s Shanghai Composite lost 1.04%.
Commodities and other assets
- Oil futures closed lower, with December WTI crude oil at $40.66, up $0.02 or +0.05%, and December Brent crude oil at $42.54, up $0.08 or +0.19%.
- Gold futures rose 60 cents, or 0.03%, to settle at $1,905.20 an ounce.
- The yield on the 10-year Treasury note edged back 0.7 basis point to 0.840%. Yields and bond prices move in opposite directions.
- The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, was down 0.2% and registered a weekly decline of around 1%.
- GBPUSD was last down 0.37% at 1.3033, driven by developments in Brexit talks.
- Elsewhere, the safe-haven yen dipped 0.12% to 104.725 per dollar, while the Chinese yuan ticked up 0.03% against the dollar after comments from a Chinese official suggested authority are not too worried about its recent rise.
- Wall Street will face a deluge of market-moving events next week, which precedes the US election week.
- Investors will have a lot of information to digest, including the presidential election and uncertainty associated with it, corporate earnings reports, and the highly anticipated stimulus bill.
- Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.