Market Perspective for August 31, 2020

Equities were mixed on Monday, though tech and healthcare shares rallied. The Nasdaq gained 0.68 percent. The S&P 500 Index slid 0.22 percent, the Russell 2000 Index 0.53 percent and the Dow Jones Industrial Average 0.78 percent.

SPDR Healthcare (XLV) advanced 0.27 percent and SPDR Technology (XLK) 0.28 percent. SPDR S&P Biotech (XBI) rose 2.80 percent and First Trust Dow Jones Internet (FDN) 0.88 percent. Post-split Tesla (TSLA) jumped 12.61 percent and post-split Apple (AAPL) 3.17 percent. Amazon (AMZN) climbed 1.21 percent and Netflix 1.04 percent.

August manufacturing PMIs will be out on Tuesday. Flash readings showed the U.S. manufacturing sector moved well into expansion, but Europe and Japan showed signs of weakness. Investors will be looking for confirmation of these trends tomorrow.

Motor vehicle sales will be released tomorrow. In July, sales climbed to an annualized pace of 14.5 million.

Friday brings the August unemployment report. Economists predict initial claims for unemployment will fall below 1 million in the week ended August 29. Weekly claims have held around 1 million, but continuing claims have been steadily declining. Economists predict 1.3 million net increase in payrolls last month, with the unemployment rate falling to 9.8 percent.

Crude oil held steady on Monday, closing at $42.82 per barrel. SPDR Energy (XLE) slipped 2.17 percent.

The 10-year yield fell to 0.69 percent. iShares iBoxx Investment Grade Corporate Bond (LQD) rose 0.46 percent and Fidelity Corporate Bond climbed 0.41 percent on the day. iShares iBoxx High Yield Corporate Bond (HYG) dipped 0.07 percent.

Earnings season is winding down. This week’s major reports include H&R Block (HRB), Five Below (FIVE), Copart (CPRT), DocuSign (DOCU), Broadcom (AVGO), Ciena (CIEN) and Campbell’s Soup (CPB).

 

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