Todd’s Take on the Market
Things changed, traders and investors didn’t want to be short going into the weekend. That has not been the mentality forever.
Last week, stocks finished mostly higher, with the Dow being the exception. The Dow finished lower on the week but the S&P 500 and the NASDAQ finished higher.
The week’s performance for the NASDAQ was highlighted by some big tech earnings. Apple, Facebook, Amazon and Google reported blowout numbers, pushing the NASDAQ higher.
Economic data was bad, but it was much better than expected. Pending home sales continued to climb in June, rising 16.6% monthly since May, and rising 6.3% since June 2019, according to the National Association of Realtors. The Realtors have also raised their forecast for the housing market because of what they say is an apparent market turnaround.
Manufacturing activity across the central Atlantic region of the U.S. rose in July going back to the expansionary territory, data from a report compiled by the Federal Reserve Bank of Richmond showed Tuesday. The Fifth District Survey of Manufacturing Activity’s July composite index was 10, up from the 0-reading registered in June. The reading beat forecasts from economists polled by Dow Jones Newswires, which expected the index to be at 3.
Q2 GDP dropped at a record annualized pace, down 32.9%. This was better than expected, but the worst on record.
The FED has got our back. FOMC statement: “The path of the economy will depend significantly on the course of the virus”.
Economic data in the Eurozone generally has seen a massive improvement relative to expectations of late, sending Citi’s Economic Surprise Index to the highest levels since August of 2010.
Meanwhile, more than 1.4mm people per week are still making initial claims filings as the labor market remains very soft. Continuing claims UP 5.4% WoW.
Unemployment is moving in the wrong direction as the coronavirus triggers more layoffs.
Remember, most unemployed workers already got their final $600/week in aid from the federal government.
So, as we head into the dog days of summer, when the virus was supposed to fade, we are still dealing with it. Schools are trying to figure out how to open across the nation.
We have one more week of earnings, and the latest jobs report is on deck for Friday, so stay tuned and we’ll keep you posted.
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC
