If you follow market performance daily, it is likely you ended the week with a significant case of whiplash. Volatility raged and the Dow experienced triple digit moves nearly every day. Keep in mind that ‘volatility’ doesn’t equal losses – there were two days of solid gains – but such significant sways in either direction are frequently unnerving.
Talking a closer look at returns, the markets ended up mixed for the week. While the Dow and S&P 500 closed lower, thanks to a Friday afternoon rally, the NASDAQ posted gains for the week. It was the first such positive end for the NASDAQ in the last 4 weeks as tech stocks have taken quite a pounding this month.
Headlines moving the market included:
- Continued Concern over COVID-19: rising numbers of new cases, coupled with the possibility of renewed lockdowns in Europe and a reversal in the reopening progress domestically, continues to fuel anxiety over a continued economic recovery.
- Domestic Politics: the death of Supreme Court Justice Ruth Bader Ginsburg and the looming battle over filling her seat has further inflamed Washington D.C. This current environment makes it hard to imagine Democrats and Republicans coming together to pass an additional fiscal aid package. Additionally, the upcoming election and potential for a drawn out fight over election results creates short-term uncertainty for the markets.
- Existing Home Sales: one bright spot in the economy is the growth in home sales. August posted a gain of 2.4%, which is the fastest pace in nearly 14 years.
- Weekly Jobless Claims: there was an unexpected rise in weekly jobless claims this week, up to 870,000.
Looking forward, three trading days remain in September. This month has proven to be volatile and all major markets will likely post losses for September. However, third quarter will likely exhibit solid gains across the board. We anticipate volatility continuing into fourth quarter as we grapple with a presidential election and global pandemic. However, there is also cause for optimism as we wind down 2020.