Weekly Market Update for November 2, 2020

No Stimulus, Stocks Lag

WEEKLY UPDATE - NOVEMBER 2, 2020

In This Issue

Tax Tips

The Week on Wall Street

Stock prices dropped last week as hopes for a fiscal stimulus bill faded and investors focused on rising COVID-19 infections, here and abroad.

The Dow Jones Industrial Average slid 6.47%, while the Standard & Poor's 500 tumbled 5.64%. The Nasdaq Composite index lost 5.51% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 5.02%.[1][2][3]

A Difficult Week for Stocks

Stocks opened the week lower as lawmakers failed to pass a fiscal stimulus bill and a pick up in the number of new COVID-19 cases in the U.S. and Europe. Hardest hit were companies most exposed to pandemic-related economic impacts, including energy, travel and leisure, and industrials.

Losses accelerated mid-week on reports of rising coronavirus-related hospitalizations, along with news that Germany and France were reinstating partial shutdown restrictions.[4]

Stocks attempted to recover on Thursday, but took another leg lower on Friday as earnings reports from the mega-cap technology companies failed to impress investors.

Positive Economic News

There were several strong economic reports during the week, but investors paid little attention. Among the highlights were durable goods orders, which rose for the fifth consecutive month, a sharp drop in initial jobless claims that were the lowest since March 14th, and a 33.1% annualized jump in economic growth during the third quarter.[5][6][7]

Investors also ignored a strong start to earnings season, which has seen 85% of reporting companies in the S&P 500 index beating earnings estimates by an average margin of 19%.[8]

THIS WEEK: KEY ECONOMIC DATA

Monday: ISM (Institute for Supply Management) Manufacturing Index.

Wednesday: ADP (Automated Data Processing) Employment Report. ISM (Institute for Supply Management) Services Index.

Thursday: Jobless Claims. FOMC (Federal Open Market Committee) Meeting Announcement.

Friday: Employment Situation.

Source: Econoday, October 30, 2020

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THIS WEEK: COMPANIES REPORTING EARNINGS

Monday: Paypal Holdings (PYPL), The Clorox Company (CLX), Mondelez International (MDLZ), Eversource Energy (ES)

Tuesday: Humana, Inc. (HUM), Prudential Financial (PRU), Emerson Electric (EMR)

Wednesday: Qualcomm (QCOM)

Thursday: Alibaba Group (BABA), Square, Inc. (SQ), Bristol Myers Squibb (BMY), General Motors (GM), Duke Energy (DUK), Cigna Corp. (CI), T-Mobile:US (TMUS), Booking Holdings (BKNG), MetLife (MET)

Friday: CVS Health Corp. (CVS), Marriott International (MAR)

Source: Zacks, October 30, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Know the Signs of an IRS Phone Scam

Unfortunately, criminals often use the IRS as a gateway for common phone scams. These scams can differ, but they generally include someone posing as an IRS agent asking for payment. These calls can be scary, especially if you don't know what to believe.

Here are some signs of a phone scam so you can recognize them and report them to the IRS immediately:

Generally, the IRS will first try to reach you by mail if you owe money. If you haven't received any previous notice, the call might be fraudulent.
The IRS will never ask about personal information over the phone, such as your Social Security Number.
The IRS will also never request immediate payment using specific payment methods such as prepaid debit cards, gift cards, or wire transfers.
The IRS won't demand that these taxes be paid without giving you the opportunity to ask questions about the amount owed.
The IRS won't threaten to immediately bring in law enforcement groups to have you arrested for not paying.

If you receive these scam calls, hang up immediately and report the call to the IRS using the IRS Impersonation Scam Reporting form or by calling 800-366-4484.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS[9]

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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

[1] The Wall Street Journal, October 30, 2020

[2] The Wall Street Journal, October 30, 2020

[3] The Wall Street Journal, October 30, 2020

[4] CNBC, October 27, 2020

[5] The Wall Street Journal, October 27, 2020

[6] CNBC, October 29, 2020

[7] The Wall Street Journal, October 29, 2020

[8] CNBC, October 29, 2020

[9] IRS.gov, March 9, 2020

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