September 14, 2020

Weekly Market Commentary September 7th to September 11th 2020

A failure by Congress to reach an agreement on additional coronavirus stimulus topped news stories this week. The holdup is centered around a disagreement on the size of weekly unemployment benefits, and state and local government aid. While the labor market has improved, initial jobless claims came in above expectations this week at 884,000 (also rising from last week’s 881,000 level.) The JOLTS Job Openings Survey showed that employers are willing to hire, with 6.6 million jobs available compared to 5.9 million last month. Open questions remain about the quality of new jobs, and whether workers fearing the coronavirus will even re-enter the labor market to pursue them.

Inflation was in focus this week. Consumer Prices rose 0.4% month-over-month and Core CPI was up 1.7% from last year, slightly beating a 1.6% estimate. The PPI, measuring producers’ prices for goods, also beat estimates and was up 0.6% year-on-year compared to a 0.3% estimate. Consumer and small business optimism surveys showed positive results, as the monthly Bloomberg Consumer Comfort survey rose from 45.1 to 47.8, and the NFIB Small Business Survey beat estimates.

U.S. equities were volatile this week as investors weighed the outlook for large-cap tech stocks and digested news surrounding coronavirus vaccines. The S&P 500 finished the week off by -2.5% to 3,341. The NASDAQ, weighed down by tech, was down -4.2% to 10,853, while the Dow Jones Industrials fell by -1.7% to 27,666. The 10-year U.S. Treasury yield finished the week down 4 bps to 0.67%, trading in a tight range throughout the week.

Key economic releases next week include the Empire State and Philly Fed Manufacturing Surveys, Housing Starts and Building Permits, and Retail Sales numbers.