A Challenging Week for Stocks – Weekly Update

October 19, 2020 | By Steven DiGregorio

The Week on Wall Street

Stocks treaded water last week amid fading prospects for a stimulus bill, fears of a second wave of COVID-19 cases, and increasing political and regulatory pressures on Big Tech companies.

The Dow Jones Industrial Average added just 0.07% while the Standard & Poor’s 500 eked out a gain of 0.19%. The Nasdaq Composite index picked up 0.79% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slid 2.08%. , ,

Bumpy Week

The stock market began the week by posting strong gains on hopes of a fiscal stimulus bill. Investors were optimistic that earnings season would reflect an improving picture of corporate performance.

Stocks stumbled midweek due to a mixed bag of early earnings results, an increase in COVID-19 cases and disappointing news on key COVID-19 treatment trials. An uptick in new jobless claims and continued stalemate on a fiscal stimulus package continued to drag on markets. Clearly, investors are looking to Congress to pass a reasonable, focused stimulus package and not play partisan politics any longer.

Some good news to end the week as stocks attempted to rally on Friday, emboldened by strong retail sales, but lost momentum as trading came to a close.

Earnings Season Kicks Off

Earnings season began on an upbeat note as major banks mostly beat on revenue and profit expectations. Banks attributed the strength to rising consumer deposits, a drop in the amount of money set aside for failing loans, and strong results from their investment banking and trading units.

Airlines fared less well. Investors were disappointed with the quarterly reports even though the average daily cash burn at these companies generally improved. Airline management uniformly accompanied their earnings announcements with warnings of continued near-term weakness due to COVID-19.

THIS WEEK: KEY ECONOMIC DATA

Tuesday: Housing Starts.
Thursday: Jobless Claims. Existing Home Sales. Index of Leading Economic Indicators.

Source: Econoday, October 16, 2020
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.


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The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

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Tags: big tech, Corporate Earnings, DowJones, stimulus, Wall Street

STEVEN M DIGREGORIO is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC.
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