October 26 – October 30 Week in Review
In their worst week since March the major indices dropped more than 5% last week, as the market was overcome with growth concerns, uncertainty, and just plain old investor nervousness. The Dow Jones Industrial Average was the worst performer with a 6.5% decline, followed by the Russell 2000, down 6.2%, the S&P 500, down 5.6%, and the Nasdaq Composite, down 5.5%.
There was no shortage of negative news. Corporate earnings reactions remained disappointing and mostly negative, stimulus talks fell through, the U.S. set a new record for daily coronavirus cases, Pfizer delayed the release of its Phase 3 vaccine trial results, and the pace of new home sales unexpectedly declined in September.
News from overseas didn’t help matters. Germany and France enacted renewed lockdown measures to curb the spread of the coronavirus, and Germany's SAP lowered its revenue outlook due to lockdowns and a muted demand recovery. The Europe Stoxx 600 dropped 5.4% on the week.
The negative sounding headlines helped fuel de-risking efforts in front of this week’s U.S. presidential election, which was likely another headwind for the market due to its increasingly uncertain outcome.
As to what S&P groups suffered the most last week the information technology and industrials sectors were the weakest sectors with 6.5% declines, while the utilities sector fell the least with a 3.5% decline.
It was a tough week generally speaking last week for stocks. The market temporarily stopped the bleeding on Thursday, as the mega-cap tech stocks rallied in front of their earnings reports. Unfortunately, Apple, Amazon, and Facebook sold off on Friday despite exceeding expectations, while Alphabet had a positive reaction. Microsoft, which had reported earlier in the week, also fell noticeably.
U.S. Treasuries ended the week mixed and little changed. The 2 year yield decreased one basis point to 0.15%, while the 10 year yield increased two basis points to 0.86%, its highest close since June.
In other markets the U.S. Dollar Index advanced 1.3% to 94.05, WTI crude futures dropped 10.5%, or $4.18, to $35.70 a barrel and gold closed lower at $1,878.80 an ounce.
November 2 – November 6 Economic Calendar