|STOCKS END THE WEEK AND THE QUARTER PAINTED GREEN AS PRESIDENT AND FIRST LADY TEST POSITIVE FOR COVID
Weekly Market Update — October 6, 2020
|Weekly Market Performance
*Source: Bonds represented by the Bloomberg Barclays US Aggregate Bond TR USD. This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.
|Small Caps Trounce Large Caps
There have not been too many weeks over the past year when small–caps dominated their larger–cap counterparts, but this week was a trouncing with the Russell 2000 more than doubling the DJIA, S&P 500 and NASDAQ on the week. Even better news was that the inconsistent large–cap returns over the past month turned around this week and ended very positive.
Small-Cap Cyclicals Led Through Uncertain Times
3Q20 Russell 2000 Returns by Sector as of 9/30/20 (%)
In addition to the news on Friday about President Trump and First Lady Melania, the other piece of news that hung over the markets was the monthly report on jobs and payrolls.
|A Very Solid Third Quarter
This week also brought the end to September and the third quarter and the divergence in returns could not have been more pronounced. In a nutshell, September saw all the major indices, sectors and asset classes retreat on the month whereas the third–quarter saw the opposite.
By the time the third quarter closed, investors saw that:
It should be noted that the positive third quarter came after what many will see as validation of that September Swoon theory – when the month of September doesn’t treat equities particularly well. In fact, this past September, we saw global equity markets reverse course, halting the five straight positive months enjoyed by U.S. equity markets as:
In addition, consider how opposite the month of September and the third quarter were:
|Home Prices Skyrocketing from August 2019
Consider these eye–popping price increases:
|Worst GDP Numbers Ever
On Wednesday, the Commerce Department reported that its “Third Estimate” of 2Q2020 GDP improved marginally to a decline of 31.4%. But saying it improved marginally seems disingenuous on its face because this 30%+ decline is on the heels of the 5% decline in the first quarter. And whether the number is 31.4% or 32.9%, it’s still the worst quarterly decline in history – by a long shot.
On October 29th, the Commerce Department will release the “Advance Estimate” for Third Quarter GDP and it’s generally expected that GDP will rise at a historic rate, with some predicting 3Q2020 GDP numbers north of 30%. That would be the highest GDP gain of all time (previous record was about 16%).
|Markets Around the World This Week