October 5 – October 9 Week in Review
The markets enjoyed one of their best weeks of the year last week led by small cap and value/cyclical stocks as investors felt more confident in a recovery. The Russell 2000 rallied 6.4%, comfortably outpacing the S&P 500, which was up 3.8%, and the Dow Jones Industrial Average, up 3.3%. Technology stocks also performed well last week as evidenced by the Nasdaq Composite’s 4.6% gain.
The market rose four of the five days, and every sector in the S&P 500 ended the week in positive territory. The materials, energy, information technology, and utilities sectors advanced more than 4.0%, while the real estate sector underperformed with a 1.4% gain.
The semiconductor space was boosted by Taiwan Semiconductor reporting strong revenue growth in September, NXP Semi raising Q3 revenue guidance above consensus, and news that Xilinx is in talks to be acquired by AMD for $30 billion. As a result the Philadelphia Semiconductor Index surged 8.0% on the week.
The one day the market closed lower was when President Trump said he called off stimulus negotiations until after the election. He later clarified that he still wanted stimulus but in the form of standalone bills for airlines, small businesses, and households which was ultimately superseded by the news at the end of the week that the White House was drafting a $1.8 trillion stimulus bill.
In other news last week President Trump seemingly recovered from the coronavirus, removing some political uncertainty. Eli Lilly and Regeneron requested emergency use authorization for their COVID-19 antibody treatments, potentially aiding consumer sentiment.
U.S. Treasuries declined amid the risk-on mindset among investors, pushing yields higher in a curve-steepening trade. The 2 year yield increased three basis points to 0.16%, and the 10 year yield increased eight basis points to 0.78%.
Also last week the U.S. Dollar Index fell 0.9% to 93.06, WTI crude futures rose 9.9%, or $3.59, to $40.64 a barrel and gold closed at $1,936.30an ounce.
October 12 – October 16 Economic Calendar