November 23, 2020

Weekly Market Commentary November 16th to November 20th 2020

Retail Sales growth slowed in October to 0.3%. The reading was below consensus estimates and September sales were revised lower to 1.6% from 1.9%. Despite missing the mark, consumption remains modestly above trend from pre-pandemic levels. Non-store retail and electronics were bright spots, while restaurant spending and apparel sales were weaker.

Initial Jobless Claims rose last week to 742k. Part of this may be companies paring back workers with rising COVID restrictions. A technical factor may, however, also be at play. Unemployed workers missing a recertification filing deadline fall off the Continuing Claims count (lower in the latest report to 6.3mm), then are added back to the Initial Claims count. Either way, the labor market continues to be a headwind to economic growth.

Existing Home Sales reached a multi-year record for this time of year. The 6.65 million annualized pace is higher by 26% from this time last year. Housing Starts advanced by 4.9% to a higher than expected annualized rate of 1.53 million. New Building Permits were equally strong at a 1.55 million annualized pace. Mortgage applications remain at multi-year highs, with the low rate environment driving activity.

Investor enthusiasm for positive vaccine developments waned as the week progressed. A daily string of record new COVID cases and related hospitalizations continued to create uneasiness. The Treasury’s decision to allow emergency federal support to expire served as a headwind as well. The S&P 500 ended the week lower by -0.8% at 3,557. The Nasdaq Composite held on to a modest gain of 0.2%. The 10-year U.S. Treasury yield traded in a range of 0.92-0.82%, closing the final session at 0.83%.

Key economic releases in the upcoming holiday-shortened trading week include Durable Goods Orders, a revised estimate of Q3 GDP, Consumer Confidence, New Home Sales and Weekly Jobless Claims.