Todd’s Take on the Market
Markets climbed last week on hopes of economic recovery despite near-term setbacks. In the US, equities stumbled mid-week when President Trump opted out of negotiations for further pre-election stimulus but ultimately rallied on the prospects of an eventual package. The S&P 500 Index finished the week up 3.89%, and cyclical stocks notably outperformed their defensive counterparts.
At the end of the week, the Dow rose 3.31%, the S&P 500 went up 3.89%, and the NASDAQ gained 4.57%. Those were for the week, and they would have been good numbers for an entire month.
What we are going through now is no different than what happened during the trade deal talks. One day, there is optimism, and the next day, there is pessimism. Economic data doesn’t matter, earnings haven’t started in force yet, and even the election has no impact on the market. It is a “deal or no deal” situation, and the markets tend to move solely on that.
The yield on the 10-year hit the highest since June. And get this, based on the “optimism” of a stimulus package, it’s becoming quite comical. But we know how to tune out the noise.
On the economic front, initial jobless claims came in at 840,000, versus the 820,000 expected, and continuing claims were 1,097,600. Unfortunately, there are a lot of people out of work and many who have been out for a while.
I wish I had more to offer, but current market trading is dependent on an agreement of a stimulus package. Other than that, nothing else matters.
This week we kick off earnings season. We will hear from the big banks, and it will be interesting what they have to say in this “low” rate environment. If you check in on the markets, and they are either up or down, you will know which way the “stimulus” talks are going. Stay tuned, and we’ll keep you posted.
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC
