Market Perspective for September 27, 2020

The Nasdaq increased 1.11 percent last week. The S&P 500 Index declined 0.45 percent, the Dow Jones Industrial Average 1.75 percent and the Russell 2000 Index 4.03 percent.

SPDR Technology (XLK) climbed 2.19 percent, SPDR Utilities (XLU) 1.22 percent and SPDR Consumer Discretionary (XLY) 0.19 percent.

Existing home sales exceeded already bullish expectations, hitting an annualized pace of 6.00 million in August. New home sales crushed expectations by more than 100,000, hitting an annualized pace of 1.01 million. Homebuilders are at their most confident ever and new home sales are hitting levels last seen during the 2000s housing bubble. Still, adjusted for population growth, home sales are not yet at “bubble” levels.

Initial claims for unemployment were 870,000 last week, which has been consistent over the past few weeks. Continuing claims continued to fall. Last week, there were 12.58 million Americans still drawing checks from the various state unemployment programs.

Both the flash manufacturing and service PMIs rose from August levels and show the U.S. economy is expanding at a healthy rate.

The U.S. Dollar Index gained 1.79 percent last week. The move created an intense headwind for foreign stocks. iShares MSCI EAFE (EFA) fell 3.16 percent and iShares MSCI Emerging Markets (EEM) slid 3.55 percent.

Crude oil fell more than 2 percent last week, closing at $40 per barrel. SPDR Energy (XLE) slid 8.76 percent. Solar stocks bucked the trend and traded higher with technology. Invesco Solar (TAN) rose 4.46 percent.

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