NDS Weekly Commentary (8.17.20) – Market Advance Broadens

August 17, 2020

Equity markets continued their advance last week. In the U.S., the DJIA and S&P 500 were up 1.9% and 0.7%, respectively. The NASDAQ was basically flat as technology stocks, which have been leading the markets, took the week off. So far in August, economically sensitive sectors like financials, industrials and energy have been bouncing back on signs the economy is starting to recover. Industrials and energy were the best performing sectors last week, while utilities and real estate were the worst. A broadening in the stock market is a good sign. International equity markets also advanced last week with the MSCI EAFE up 2.5% and emerging markets up 0.4%.

Economic news was mostly positive as initial jobless claims fell below 1million for the first time since March and retail sales were up 1.2%, a third consecutive monthly gain. Most economists are expecting the 3rd quarter GDP to rebound at an 18.3% annual rate. Consumers are still cautious, however, as there are still regional spikes in the Coronavirus and uncertainty over the return to schools. Data shows that credit card spending slowed in late July and early August compared to a year ago. Core CPI rose 0.6% in July, tripling expectations for a 0.2% monthly gain. Fixed income markets reflected the stronger economic numbers with the 10 year U.S. Treasury yield increasing from 0.57% to 0.71%.

We still expect markets to be volatile and dominated by Coronavirus news and election headlines. A diversified portfolio should continue to serve you well.

“Well done is better than well said.” – Benjamin Franklin