November 2, 2020

Weekly Market Commentary October 26th to October 30th 2020

An initial reading of Q3 GDP showed strong economic growth of 33.1%, coming in ahead of lofty estimates. The record rebound is a partial recovery to the dismal start for the U.S. economy in the first two quarters of 2020. Strong consumer spending, supported by temporary stimulus payments, provided support to recovering businesses.

Durable Goods Orders improved in September to 1.9%, well ahead of expectations and the 0.4% advance from the prior month. Business orders for Capital Goods over the past two months are supporting more factory capacity coming back online post lockdown. Regional Fed Manufacturing data across Richmond, Philadelphia, Dallas and Kansas City have shown a supportive uptrend.

Weekly Jobless Claims were modestly lower than the prior week at 751k as were Continuing Claims at 7.76mm. The prospects of an additional fiscal stimulus package for Main Street was pushed further down the road.

U.S. equity market volatility heightened the week before the Presidential election and amid rising virus cases. The S&P 500 ended a week marked by steep daily sell offs lower by -5.6% to 3,269, one of the worst weeks for stocks since March. Mixed earnings results by large tech companies weighted on the Nasdaq Composite as well, lower by -5.5%. The 10-year US Treasury yield closed the week at 0.87%.

Key economic data being released next week includes Nonfarm Payrolls – Unemployment, Weekly Jobless Claims, ISM Manufacturing and Factory Orders. The Federal Open Markets Committee (FOMC) meets as well with no changes to rate policy anticipated.