S&P 500 Index: 3.7%
Dow Jones Industrial Average: 3.3 %
Nasdaq Composite: 4.6%
US and International Equities
The S&P 500 Index posted its best week in more than three months, boosted by renewed stimulus talks and the potential for targeted business-aid, and all major sectors finished in the green. Energy, after struggling the past month, was the best performing sector. Materials, utilities, and industrials were also among the sector leaders. Growth and value performed in-line, though small caps stole the show with the Russell 2000 posting a more than 6% gain.
“Talk about the stimulus package has been like a fickle relationship” said LPL Financial Chief Investment Officer Burt White, “It’s been off, then on, then off again, and now it appears back on.”
Even though Chinese markets were closed for a holiday for most of the week, international equities ended the week higher, with the MSCI Emerging Markets Index outperforming the MSCI EAFE Index, but both returning more than 2%.
Fixed Income, Currencies, and Commodities
Fixed income, as denoted by the Bloomberg Barclays US Aggregate, finished lower as did most bond sectors. The yield on the 10-year Treasury note rose to its highest level since mid-June. High yield bonds, as denoted by the Bloomberg Barclays High Yield Index, was a top performer amid the risk-on sentiment.
Commodities had a solid week. Natural gas and West Texas Intermediate crude oil were major contributors, each ending the week up over 10%. Gold, copper, and silver all finished higher, led by silver’s nearly 5% gain. The US dollar fell for the second consecutive week.
US and International Economic Data Recap
Weekly jobless claims missed analyst expectations, with 840,000 Americans filing versus the Bloomberg consensus estimate of 820,000 (US Department of Labor), while the prior week’s number was also revised slightly higher. Weekly filings were lower than the four-week average of under 860,000, but topped the consensus estimate Continuing claims fell to under 11 million, a decline of 1 million from the week prior, while nearly every state had fewer continuing claims than last week’s print. However, survey data continues to note a backlog in filings in California, which may skew the data higher in the future as filings in the state are processed.
As a percent of gross domestic product (GDP), fiscal stimulus packages enacted in Japan (over 40%), Italy and Germany (over 30%), and France (roughly 20%) are well above the roughly 12% that’s been delivered in the United States to date, according to data compiled by Ned Davis Research, further underscoring the potential need for more US stimulus.
Next week, the following economic data is slated to be released:
- On Tuesday, we get the September National Federation of Independent Businesses (NFIB) Small Business Index along with the Consumer Price Index (CPI). Moreover, we will receive September’s average workweek data along with last month’s Treasury Budget.
- On Wednesday, we find out about September’s Producer Price Index.
- Thursday provides investors with another anticipated weekly initial unemployment claims report. Moreover, we get data on last month’s export and import prices.
- Friday wraps up the week with September’s retail sales, manufacturing and industrial production, and business inventories, along with Michigan sentiment.
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