Stocks indices ended the week substantially lower as Covid cases surged across the country setting records for a seven day average and for a single day. Maximum uncertainty remains on stimulus/relief spending and what will happen after the election. The declines came despite good economic news on third quarter gross domestic product and September consumer spending and personal incomes. I was also a great week for corporate earnings accountments. Right now there is maximum uncertainty, politically and regarding stimulus/relief spending. However, that could change in a matter of days. The impact of the virus on the U.S. economy will take months.
Treasury yields rose with the 30-year bond yield at 1.664% and the 10-Year note at 0.8790%. Crude oil fell to $35.72 a barrel and natural gas rose to $3.50 per MMBTUs. The U.S. dollar index rose to 93.88 and gold prices rose to $1878.80 an ounce.
In the economic numbers this week:
- The Commerce Department reported:
- New home sales fell 3.5% in August after hitting a 14 year high in July. From a year earlier, new home sales were up 32.1%.
- The median selling price of a new home in August was 3.5% higher than a year earlier.
- Durable goods orders rose 1.9% in September for the fifth consecutive monthly increase. New orders for nondefense capital goods excluding aircraft, a measure of business investment, increased 1% in September.
- Homeownership rose to 67.4% in Q3, up from 64.8% a year earlier but down from 67.9% in Q2.
- Gross domestic product rose sharply at a 33.1% annual rate in the 3rd quarter following a drop of 31.4% annual rate in the 2nd quarter and a 5% drop in Q1.
- Household spending rose 1.4% in September.
- Personal incomes rose 0.9% in September.
- The S&P CoreLogic Case-Shiller National Home Price Index rose 5.7% in August from a year earlier up from 4.8% increase in July.
- The Labor Department reported:
- A seasonally adjusted 751,000 workers filed initial claims for unemployment in the week ending October 24th down 40,000 from the week before.
- Continuing claims for regular unemployment fell from 8.4MM to 7.756MM in the week ending October 17th.
- A broader measure of claims including extended benefits, pandemic assistance and other programs stood at 22.7MM as of October 10th.
- The EIA weekly oil report is here wpsrsummary. Also, the EIA reported in the past week:
- Field production of crude oil fell from 9.9MM barrels per day to 11.1MM barrels per day.
- Natural gas storage rose by 29BN cubic feet and is above the highest level at this time of year during the past five years.
- Baker Hughes reported the number of active oil rigs rose 10 to 221. The number of active natural gas rigs fell 1 to 72.
- Factset reported that with 64% of S&P500 companies reporting earnings, the blended earnings decline from Q3 2019 is 9.8%. However, the percentage of companies beating earnings forecast and the magnitude of the earnings beats are at or near record levels.
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Loren C. Rex, CFP®, AIF®, MA Erik A Smith AIF®
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.