Positive COVID-19 vaccine news was not enough to overcome rising tensions between the US and China and disappointing US economic data, pushing US Equity Markets down slightly last week. The S&P 500 fell was down 0.3% for the week and is now down 0.5% for the year. Profit-taking in large-cap Technology stocks continued, causing the Nasdaq to drop 1.3% for the week, though it remains up 15.5% for the year. The Russell 2000 (small-cap stocks) was down 0.4% for the week to bring its losses for the year to down 12.0%.
Global Equity Markets were up last week, as news of a European Union agreement on a 750 billion Euro fiscal stimulus package outweighed the rising US-China tensions. As a result, Developed Markets rose 0.4% for the week to reduce its losses for the year to down 8.8%. Emerging Markets increased 0.5% for the week and are now down 4.9% for the year.
While still early, US corporate earnings for the second quarter have largely come in better than expected thus far. With 26% of companies reporting their results, 81% of companies have beaten earnings per share (EPS) estimates, and 71% have beaten sales estimates, both much higher than historical norms. The average earnings decline thus far is about 42%.
Of Interest to Us
Initial Jobless Claims increased for the first time in 16 weeks, rising by 109K to 1.416 million, which was worse than projections. It is also the 18th straight week that claims have exceeded 1.0 million. This is a key data point that we are watching, as it may be an early reflection of the adverse economic impact from states pushing back their re-opening due to rising COVID-19 cases.
for the week ending 7/24/2020
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