THE WEEK ON WALL STREET
Stocks slipped as the technology sector remained under pressure and a mid-week announcement by the Federal Reserve failed to inspire investors.
The Dow Jones Industrial Average declined 0.03%, while the Standard & Poor's 500 fell 0.64%. The Nasdaq Composite index dropped 0.56% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 0.75%.1,2,3
Technology Pulls Stocks Lower
As has been the case in recent weeks, technology stocks led the market higher, then lower in an otherwise turbulent week of trading.
Merger and acquisition activity announced at the start of the week generated a rush back into technology stocks, sparking a rebound from the previous week's drop. Stocks continued to advance until Wednesday, when investors began to digest comments from the Fed's Federal Open Market Committee meeting. The Fed delivered a message that coupled assurances of continued low rates with concerns about the health of the economic recovery.4
The Fed Stays the Course
In the last Federal Open Market Committee (FOMC) meeting before the November election, the Fed signaled that interest rates would not be increased "until labor market conditions have reached levels consistent with the committee's assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time."
Most Fed officials do not see this happening until 2023.
While the Fed maintained its view on the importance of fiscal stimulus to help American workers and businesses, it did improve its outlook for unemployment in its latest economic outlook. The Fed now expects unemployment would average around 7-8% in the final three months of the year, down from its June prediction of around 9-10%.5
BY THE NUMBER$
AS LONG AS RATES STAY LOW - The average interest rate that the US government pays on its interest-bearing debt as of 8/31/20 was 1.795%, down from 2.331% as of 12/31/15. That means our government can borrow 29.9% more money today than it borrowed 5 years ago and still have the same out-of-pocket interest expense cost (source: Treasury Department).
BACK IN BUSINESS - US ports received ships carrying 2.06 million containers loaded with cargo during the month of August 2020. That's the largest number ever recorded. (source: National Retail Federation Global Port Tracker).
MONDAY NIGHT TV - The first "Monday Night Football" game was played on 9/21/70 or 50 years ago today. The Cleveland Browns beat the New York Jets 31-21. The TV broadcast team included Keith Jackson, Howard Cosell and Don Meredith. Jackson was replaced a year later by Frank Gifford (source: Sports Illustrated). 6
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Existing Home Sales.
Thursday: Jobless Claims. New Home Sales.
Friday: Durable Goods Orders.
Source: Econoday, September 18, 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.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: Nike (NKE), Autozone (AZO), Fedex (FDX).
Wednesday: General Mills (GIS).
Thursday: Costco Wholesale (COST), Darden Restaurants (DRI), Carnival Corp. (CCL).
Source: Zacks, September 18, 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.
THE WEEKLY RIDDLE
A family has a mother, father, and four daughters. Each daughter has one brother. How many people are in the family?
LAST WEEK'S RIDDLE: A plastic bottle filled with cola weighs one liter. What do you need to add to it to make it weigh less than two ounces?
ANSWER: Add a hole to it.