US Stock Market Weekly Update Sept. 28- Oct. 2, 2020

After a fourth consecutive week with losses for major US stock indexes, the US stock market closed higher for the week with small-cap stocks underperforming. News that President Trump and First Lady Melania Trump have both tested positive for COVID-19 moved the stock market lower at the last trading session of the week, and developments on this may or may not prove to be vital for the presidential elections next month and add extra volatility to the stock market. Last week our comment that “The main financial and business theme now seems to be a rather continuing, but at the same slowing economic recovery for the US economy” was confirmed by weak non-farm payrolls numbers.

Economic News

The CB Consumer Confidence beat the expectation of 89.5 by far coming in at 101.8, which is very positive news for consumer spending and future economic growth. The ADP National Employment Report which measures levels of non-farm private employment was stronger than expected with an actual figure of 749K, higher than the forecast of 650K. The GDP Growth Rate QoQ Final was marginally better at -31.4% versus -31.7%. The Core Personal Consumption Expenditure Price Index which provides a measure of the prices paid by people for domestic purchases of goods and services, excluding the prices of food and energy came in at 1.6%, higher than the forecast of 1.4%, The core PCE is the Fed's preferred inflation measure. And while it has picked up a bit, it is still away from the 2% target set by the Fed. Recently the Fed mentioned that the 2% inflation target could be revised higher.

The labor market data showed better than expected Initial Jobless Claims and Continuing Jobless Claims coming in at 837K and 11767K respectively. The forecasts for Initial Jobless Claims and Continuing Jobless Claims were 850K and 12225K respectively. The ISM Manufacturing PMI missed the forecast of 56.4 with a figure of 55.4 but still showed that the manufacturing economy is generally expanding. The Non-Farm Payrolls were a big miss, with a figure of 661K versus the forecast of 850K. There was an improvement though for the Unemployment Rate declining at 7.9% lower than the forecast of 8.2%. The Michigan Consumer Sentiment Final was also strong with a figure of 80.4 beating the forecast of 79.

United States Consumer Sentiment

"The University of Michigan's consumer sentiment for the US was revised higher to 80.4 in September of 2020 from a preliminary of 78.9. It remains the highest reading since March, mainly due to a more optimistic outlook for the national economy (75.6 vs 68.5 in August). The gauge for current conditions also improved (87.8 vs 82.9); inflation expectations for the year ahead slowed (2.6% vs 3.1%) while the 5-year outlook was unchanged from the previous month (2.7%). Nonetheless, two non-economic issues still represent the primary source of uncertainty and could cause volatile shifts in consumer confidence: when and how the election is decided, and delays in obtaining a vaccine and its widespread availability. Although the survey was completed before the presidential debate, likely, the chaotic debate has already added to these uncertainties.”

Source: Trading Economics

It is the second consecutive month of rising figures for The University of Michigan's consumer sentiment, and it could signal indeed a further optimistic outlook for the broader US economy.

For the week of September 28– October 2, 2020, the major US stock market indexes closed as follows on Friday, September 28:

• Dow Jones Industrial Average: Close 27682.81, +1.87% for the week, -3.00% Year-to-date

• S&P 500 Index: Close 3348.44 , +1.52% for the week, +3.64% Year-to-date

• Nasdaq Composite: Close 11075.02 , +1.48% for the week, +23.43%, Year-to-date

• Russell 2000: Close 1539.30 , +4.37% for the week, -7.74% Year-to-date

Weekly Stock Gainers

These are the top three gainers, stocks with five days of consecutive price advances:

1. Westwater Resources (Nasdaq: WWR), Close 4.42, 5-day change +196.64%

2. American Renal Associates (NYSE:ARA), Close 11.52, 5-day change +84.32%

3. Lithium Americas Corp (NYSE:LAC), Close 14.70, 5-day change +72.13%

Weekly Stock Losers

These are the top three losers, stocks with five days of consecutive price declines:

1. Taysha Gene Therapies Inc (Nasdaq:TSHA), Close 20.08, 5-day change -17.94%

2. Bluecity Holdings Limited ADR (Nasdaq:BLCT), Close 8.28, 5-day change -15.16%

3. Orchard Therapeutics Plc ADR (Nasdaq:ORTX), Close 3.86, 5-day change -12.67%

Economic events for the week October 5- October 9, 2020:

Important economic data for the week will be ISM Non-Manufacturing PMI, the MBA Mortgage Applications, the FOMC Minutes, the Balance of Trade, and the weekly Jobless Claims.

Sources:

https://www.wsj.com/market-data/stocks/us/indexes

https://www.barchart.com

https://www.fxstreet.com/economic-calendar