E US Stock Market Weekly Review Aug. 10-14

A second consecutive week with gains for the US stock market, and the S&P 500 index very near to its February 2020 all-time high. Dow Jones (DIA) outperformed this week compared to the S&P 500 (SPX) and Nasdaq Composite (COMP). While there is plenty of uncertainty about a new economic stimulus by the US government, two notable events were a downward trend in new coronavirus cases and Initial jobless claims falling below one million for the first time since March 2020. Let's not forget that the Federal Reserve recently mentioned that the US economic recovery is dependent on the Covid-19 outcomes.

Economic News

Τhe Inflation Rate and the Core Inflation Rate picked up with figures of 1% and 1.6% respectively on a year-over-year basis. The expectations were 0.8% and 1.1% respectively and this uptick is of no surprise, as increased demand for goods and services after the lockdown justifies this increase. The weekly Continuing Jobless Claims and Initial Jobless Claims both came in at better than expected with figures of 15,486,000 and 963K respectively. The forecasts were for a figure of 15.898M for the Continuing Jobless Claims and several 1.12M for the Initial Jobless Claims. The Retail Sales MoM were softer than expected at 1.2%, less than the forecast of 1.9% and the Michigan Consumer Sentiment Preliminary beat marginally the forecast, with a figure of 72.8, compared to the estimate of 72.

Why the Michigan Consumer Sentiment Index is so important to monitor? Mainly because it shows important data about consumers and future economic prospects. Increased optimism may lead to higher levels of consumption, which can have a positive impact on GDP growth.

The United States Consumer Sentiment

“The University of Michigan's consumer sentiment for the US stood at 72.8 in August 2020, little-changed from the previous month's 72.5, and compared to market expectations of 72.0, a preliminary estimate showed. The gauge for consumer expectations increased to 66.5 from 65.9, while the current economic conditions sub-index edged down to 82.5 from 82.8. "The policy gridlock has acted to increase uncertainty and heightened the need for precautionary funds to offset lapses in economic relief programs and to hedge against fears about the persistence and spread of the coronavirus as the school year gets underway. Bad economic times are anticipated to persist not only during the year ahead, but the majority of consumers expect no return to a period of uninterrupted growth over the next five years.", Surveys of Consumers chief economist, Richard Curtin, said.”

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Disclosure: I have no position in any stock mentioned

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