Weekly Market Digest: Uncertain Stimulus Timeline May Drive Volatility

U.S. stocks were flat for the week while international stocks were down. In Europe, data showed a resurgence in new coronavirus cases per day, sparking talks of potential renewed lockdown measures.

Part of the increase has been attributed to a surge in testing that has caught several asymptomatic cases that would have otherwise gone undetected in the first wave. So far, it appears to be less deadly this time around with hospitalization and death rates lower than back in March and April. In the U.S. more than 8 million people have been diagnosed with the virus and the death toll is now close to 220,000. As the world braces for a second wave, attention in the U.S. has been focused on the need for additional stimulus measures and the upcoming presidential election.

Weekly Returns

S&P 500: 3,326 (+0.19%)
FTSE All-World ex-US (VEU): (-1.12%)
US 10 Year Treasury Yield: 0.76 (-0.03)
Gold: $1,898.21 (-1.66%)
EUR/USD: 1.1719 (-0.89%)

Major Events

Monday – The Senate Judiciary Committee began Supreme Court confirmation hearings for Judge Amy Coney Barret, who would be the sixth conservative justice on the nine-judge Supreme Court if confirmed.
Monday – Earnings season kicked off with several large banks reporting earnings that beat expectations this week.
Tuesday – U.S. health regulators paused Eli Lilly’s phase three trial of ACTIV-3, a monoclonal antibody treatment for the coronavirus, over potential safety concerns.
Wednesday – Europe surpassed the U.S. in new cases of Covid-19.
Thursday – New jobless claims came in higher than expected and at the highest level since August 22 while continuing claims dropped over 10 million.
Friday – Retail sales came in surprisingly strong for September with a rise of 1.9% versus the consensus estimates of 0.7% led by clothing and accessories.

Our Take

After months of talks, party leaders still have not been able to reach a deal to pass additional stimulus measures likely needed to maintain the current yet fragile economic recovery. Treasury Secretary and House Speaker Nancy Pelosi talked extensively Thursday, making it appear that a stimulus deal before the election is not off the table. Democratic leaders want a comprehensive relief package while Republican leaders are pushing for a smaller package to get at least some stimulus passed now.

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