Pessimism and fear returned to the market last week. Monday experienced the single largest losses in the past several months with the major markets down over 1.5% for the day. Dashed hopes for a COVID-19 economic relief plan before Election Day pushed the markets lower. Tuesday the markets fretted over the latest surge in COVID cases and by Wednesday anxiety over the COVID surge and the potential for a new round of shutdowns pushed markets down another 3.5%.
Some hope did return on Thursday with a pair of positive economic reports on GDP and unemployment figures. Gross Domestic Product (GDP), a measurement of economic activity, grew to 33.1% in third quarter, topping estimates and posting the fastest growth number ever reported. First time unemployment filers declined unexpectedly for a second straight week and hit the lowest level since March. The markets responded in kind with solid gains.
However, the hope was short lived as markets returned to the red on Friday. The week wrapped up with all major markets posting roughly 5% declines.
Above all, the markets hate uncertainty. With tomorrow being Election Day, we hope that some of that uncertainty will begin to subside. Once a winner is declared and Congress gets back to work on a COVID relief package we may begin to see an ease in volatility.