Market Perspective for August 8, 2020

Positive economic news lifted equities this week. The Russell 2000 Index gained 5.80 percent, the Dow Jones Industrial Average 3.82 percent, the Nasdaq 2.46 percent and the S&P 500 Index 2.45 percent.

SPDR Industrial (XLI) advanced 4.75 percent, while SPDR Financial (XLF) added 3.29 percent and SPDR Energy (XLE) 3.16 percent.

Manufacturing PMIs rose around the world in July. The U.S., China and Germany all had PMIs signaling expansion. The ISM Service PMI climbed to 58.1 percent, the highest reading since early 2019.

Initial jobless claims were lower than forecasted. Economists expected 1.40 million new claims, but there were only 1.19 million. Continuing claims almost fell by 1 million, to 16.1 million.

The economy created 1.76 million new jobs in July, beating the 1.68 million estimate. The unemployment rate slid to 10.2 percent. Average hourly earnings gained 0.2 percent, far ahead of a forecasted 0.5-percent decline. The two employment reports show hiring picked up again at the end of July.

Crude oil held steady this week and closed with a $41 handle. Natural gas climbed more than 20 percent and cleared $2 per mmBTU. First Trust ISE Revere Natural Gas (FCG) climbed 8.33 percent on the week.

The U.S. government moved forward with banning Chinese tech companies suspected of spying on American citizens. The Presidential Working Group on Financial Markets also recommended the SEC begin cracking down on companies skirting U.S. audit rules. The Chinese government declared financial data a state secret and does not allow U.S. regulator access. Companies have until January 1, 2022 to comply or face delisting. Shares of many Chinese companies fell between 2 and 5 percent on Friday.

Technology companies kept producing strong earnings reports. Etsy (ETSY) earned 75 cents per share, smashing estimates of 39 cents. Revenue rose 137 percent. Square (SQ) earned 18 cents versus a predicted 5 cent loss. Shares of Etsy and Square rose 14.13 percent and13.38 percent, respectively.

 

0
    0
    Your Cart
    Your cart is emptyReturn to Shop