Hey Folks, as we leave Q3 behind and go into the final stretch of the year it will be very interesting with several binary choices possibly driving price action in different directions. Get me take here in this Week’s Round-Up
Weekly Sound Bites;
• U.S. stocks posted their weakest September in almost 10 years, but the weak month did not equate to a weak quarter. The S&P 500 finished Q3 with a +8.5% gain for the quarter, while the Dow posted a +7.6% increase. The strong performance in Q3 followed a strong Q2, marking the best two-quarter performance for U.S. stocks since 2009. Both indexes are up over +26% since the end of March. Meanwhile, tech shares continue to be the darlings of the recovery, with the Nasdaq soaring +11% in Q3 to register a six-month gain of +45%. For the year, the tech-heavy index is up +24%…Q3 GDP growth estimates will start arriving in the coming weeks, and the U.S. economy is expected to have posted an annual growth rate of 30%, driven by strong consumer spending and stable income levels due to fiscal stimulus.
• For this past week, after 4 straight weekly declines we see all indexes finish in the green for this week although gains were more robust among small caps… the political environment played a large role in driving sentiment as investors watched conflicting signals on stimulus negotiations between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi… Trump’s announcement Thursday night that he and his wife contracted COVID added to the uncertainty sending equities lower yet as we went into close on Friday losses moderated with the small-cap indexes moving into positive territory…
• We saw monthly payrolls showing employers added 661,000 jobs in September, well below consensus estimates of around 850,000 and unemployment falling to a better than expected 7.9%… Weekly jobless claims, showed a better than expected number of Americans filing for unemployment reaching a post-pandemic low of 837,000…we also see that Airlines are at a cross roads as they wait for a potential Fiscal Stimulus Bill…without one they have indicated layoffs could total over 32,000…
• Intermediate- and long-term Treasury yields increased modestly through most of the week, seemingly driven by renewed hopes for a stimulus deal… The 10-year Treasury note yield ended Thursday at 0.696%, up from 0.66% last Friday…Investment-grade corporate bond credit spreads—the extra yield offered over Treasures—moved tighter due to steady month-end buying…
• Chinese stocks rose slightly in a holiday-shortened week, lifted by several economic readings showing that the recovery was on track, but they ended September with their biggest monthly loss since May 2019… China’s purchasing managers’ index (PMI) readings for September underscored the country’s strong recovery after being the first to tame the coronavirus coming in over 50 showing economic expansion…
• we’re one month away from what is perhaps the most emotionally-charged – and uncertain – presidential election in modern U.S. history. What does this all mean for equity markets in Q4?… The uncertain nature of the voting process and perhaps the result has traders thinking the markets will be volatile as we round out 2020…If you will recall, during the 4 week wait until the Bush vs Gore Election was determined, the S&P dropped over 6% until Bush was declared the winner…next month’s election can bring us more of the same, hence Volatility has been bid up going into the end of this year…
Enjoy This Week’s Round-Up;
Don’t Be a Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
