Company / Analytics

Week 34 in Brief

How did the major indices perform?

U.S. stocks touched fresh records on Friday supported by positive economic data, but trading volume remained low and focused on a few large-capitalization technology names.

• The Dow Jones Industrial Average rose 190.60 points, or 0.7%, to close at 27,930.33; the S&P 500 added 11.65 points, or 0.3%, to close at 3,397.16, notching its second record of the week while the teach-heavy Nasdaq Composite closed at a fresh high of 11,311.80, up 46.85 points or 0.4%, a new 36th record for 2020.
• Separately, the small-capitalization Russell 2000 index, viewed as a bet on the health of the economy, lost 0.8% to close at 1,552.47, while the large-capitalization focused Nasdaq-100 index was up 0.7% to 11,555.16.
• For the week, the Nasdaq gained 2.7%, the S&P 500 added 0.7%, and the Dow was flat. The S&P 500 posted its longest winning streak since the week ending December 27, 2019, when the market rose for five straight weeks, according to Dow Jones Market Data.

Economic data

• The U.S. IHS purchasing managers indexes for August were better than expected, with a flash reading for manufacturing at 53.6, a 19 month high, and up from 50.9 in July. The service sector index rose to 54.8 for August, a 17 month high, and up from 50 in July. A reading of 50 or above indicates improving conditions.
• Sales of existing homes in the U.S. rose 24.7% between June and July to a seasonally-adjusted annual rate of 5.86 million. It was the second month consecutively in which the monthly increase was the largest on record, compared with a year ago, sales were up 8.7% in July.
• With so much economic data over the past few months have surprised to the upside, there will be a higher bar for positive market reaction to fresh data, according to analysts

Stocks in focus

• Bullish investors were strong on Pfizer Inc. and BioNTech which said they are on track to submit a COVID-19 vaccine candidate as early as October, while Johnson & Johnson said it was beginning the latter phases of its large vaccine trials.
• Uber and Lyft won more time on Thursday in their appeal of a California ruling that required them to classify their drivers as employees. Shares of Uber were down 1.9% at $30.83, while those for Lyft closed 2.8% lower, at $28.93.
• Tesla shares surged past the $2,000 mark for the first time on Thursday, extending its recent rally ahead of next week’s 5-to-1 share split. The stock closed at $2,049.98.
• Apple’s stock also extended gains after touching a market value of $2 trillion. Shares rallied more than 5%, extending a four-week gain over 32% and closed trading at $497.48.

European stocks closed lower Friday as investors focused on disappointing economic data out of the Eurozone and geopolitical tensions, with shares in Germany leading the region.

• The pan-European Stoxx 600 finished marginally lower by 0.15%, as most sectors and major bourses sank despite starting the session in positive territory.
• In Germany, the DAX is down 0.51% while France’s CAC 40 is off 0.30% and London’s FTSE 100 is lower by 0.19%.
• Eurozone flash PMI (purchasing managers’ index) data published on Friday dented hopes of a V-shaped recovery from the bloc’s deepest economic downturn on record. The August composite reading, widely seen as a strong gauge of economic health, fell to 51.6 from July’s 54.9, considerably below analyst expectations.
• Novartis rose 0.5% after it won U.S. health regulator’s approval to repurpose an 11-year-old blood cancer drug against multiple sclerosis while the Dutch-based payment-processing company Adyen fell 3.7% as several top executives each sold 15% of their stakes in the company, cashing in 693 million euros ($822 million) in all.

Asian markets finished broadly higher on Friday with shares in Hong Kong leading the region.

• In Hong Kong, the Hang Seng is up 1.30% while China’s Shanghai Composite is up 0.50% and Japan’s Nikkei 225 is up 0.17%.
• Shares of Singapore-based Sea Limited recently hit an all-time high after it posted its second-quarter earnings. Sea Ltd returned over 500% since its IPO in 2017, and the stock has risen 880% in the last 18 months alone. The stock closed trading at $147.42 a 3.42% drop from its $150.56 high.

Commodities

• Oil prices fell back to a familiar trading range in the low-$40s on more negative news. The U.S. crude benchmark declined 1.2%, with the most actively traded October contract falling 48 cents to settle at $42.34 a barrel on the New York Mercantile Exchange.
• Gold marked its second-straight weekly decline, with December gold futures settling at $1,947 an ounce on Comex on concerns about demand.
• The 10-year Treasury note yield fell 1.2 basis points to 0.64% due to negative and surprising European economic data. Bond prices move inversely to yields.

Currencies

• USD was up 0.5% against its major rivals at 93.28, based on trading in the ICE U.S. Dollar Index.
• On Friday, USD gained against EUR for the first week since mid-June after data showed a strong uptick in the U.S, business activity.
• GBP fell more than 1% on Friday on a mix of bad news on the latest Brexit negotiations and gains for USD that combined pushed sterling below $1.31.

Next week

• Apple and Tesla stock splits take effect next week.
• Several FTSE companies including Rolls-Royce, Provident Financials, and WPP report their financials next week.
• Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.