August 10, 2020

Weekly Market Commentary August 3rd to August 7th 2020

Despite lawmakers failing to reach a deal on a new coronavirus relief package and increased tensions between the US and China, markets finished higher this week. The S&P 500 rose 2.5%, finishing at 3,351, while the DJIA and Nasdaq closed at 27,433 and 11,011, respectively.

Employment numbers were the star of the week in terms of economic data points. On Thursday, Jobless Claims fell to 1.186 million, the first decline in three weeks and the lowest number of claims since the beginning of the COVID pandemic. Continuing Claims also fell for the week to 16.107 million. On Friday, the Unemployment Rate fell more than expected to 10.2% as Payrolls increased by 1.76 million in July, beating estimates. This was, however, a sharp decline from June’s gains of 4.8 million. Conversely, the ADP private employment report disappointed, adding just 167k jobs in July, compared to the 1.2 million consensus. Of those jobs, 166k were service producing and only 1k were goods producing, suggesting COVID outbreaks in factories may have been a bigger problem than initially thought.

The Markit Manufacturing Index came in at 50.9 for July showing little improvement over June’s final reading of 49.8. The ISM Manufacturing Index rose from 52.6 June to 54.2 in July driven mostly by new orders and production. The ISM Services Index beat expectations coming in at 58.1, also driven by new orders although employment remained weak.

Key economic releases for next week include Inflation data, Retail Sales and Jobless Claims.