E US Stock Market Weekly Review Oct. 19-23

The US stock market closed for the second consecutive week little changed with moderate losses. Small-cap stocks outperformed as Russell 2000 closed higher, a trend we have mentioned in our previous weekly US stock market updates. With no clear decision yet about a new fiscal stimulus and with less than two weeks for the Presidential elections, we may witness some increased stock market volatility. A catalyst is needed for the stock market either to move higher or make a correction, and that can be either earnings reports, the outcome of the Presidential elections, or both. And let's not forget the news of any new fiscal stimulus. Dow Jones turned negative again for 2020.

Economic News

The economic data released for the week was positive to the long-term outlook, as it showed an improvement in weekly jobless claims and also continued strength in the housing market. The Building Permits came in at 1.553 million beating the estimate of 1.52 million, but the Housing Starts were a small miss with a figure of 1.415 million compared to the forecast of 1.457 million. However, the Existing Home Sales beat the forecast of 6.3 million with an actual figure of 6.54 million. For the labor market news that Continuing Jobless Claims reported were 8.373 million less than the forecast of 9.5 million and Initial Jobless Claims reported at 787 K, less than the forecast of 860 K was both positive, but did not result in any sustainable stock market rally. And this improvement in the jobless claims should continue to last in the coming weeks, to have an argument that indeed an improvement is permanent and economic recovery is gaining more traction, is more meaningful.

Earnings reports continue to be mixed, with Intel Corporation (NASDAQ:INTC) declining 10% on Friday, October 23, 2020, after beating estimates but showing a slow down in business activities and revenue for the quarter.

For the week of October 19– October 23, 2020, the major US stock market indexes closed as follows on Friday, October 23, 2020:

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Disclosure: I have no position in any stock mentioned

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William K. 4 weeks ago Member's comment

Quite interesting indeed. Unfortunately there appears to be a mindset among some that if profits are not INCREASING that they are losing. That mindset is both Incredibly GREEDY and incredibly STUPID.

As long as an organization is producing a net profit it is still a profit, there is no loss. The fact that the profit is not as great as somebody said it would be may be a disappointment, and might even reveal a lie, but it is not a loss, just a smaller gain.

Of course, given that a big part of the stock market runs on emotions instead of logic, disappointment will have a serious effect. "Oh Well."