Analytics, 10 October 2020
Week 41 in Brief
How did the major indices perform?
U.S. stocks rose Friday to end their best since July as investors remained optimistic over prospects for another round of fiscal stimulus from Congress and the prospects of a Biden lead.
- On Friday, the Dow Jones Industrial Average rose 161.39 points, or 0.6%, to close at 28,586.90; the S&P 500 added 30.30 points, or 0.9%, to close at 3,477.13. and the Nasdaq Composite gained 158.96 points, or 1.4%, to end at 11,579.94.
- For the week, the Dow gained 3.3%, while the S&P 500 was up 3.8% and the Nasdaq was up 4.6%. Both benchmarks had their best weekly performance since early July.
- The small-cap Russell 2000 advanced 0.5% on Friday but closed the week 6.4% higher.
- Investors remained optimistic about another fiscal stimulus package being passed by Congress eventually and stocks advanced late in the week, encouraged by continued talks between House Democrats and the Trump administration.
- Amid reports the administration was willing to go to $1.8 trillion from its previous level of $1.6 trillion in its offer, compared to the Democrats $2.2 trillion proposal, Larry Kudlow, director of the White House’s National Economic Council, said Trump had signed off on a revised offer.
- Analysts also said Democratic challenger Joe Biden’s widening lead in the polls over President Donald Trump has also been seen as a supportive factor because it lessens, but doesn’t eliminate, the prospect of a contested election outcome on Nov. 3, a prospect that has unnerved investors fearing weeks of legal and political wrangling. The president trails Joe Biden by an average of 9.7 percentage points nationally according to the Real Clear Politics average of polling.
- Analysts also noted COVID-19 treatment hopes. Gilead Sciences said Thursday that a late-stage study of its experimental COVID-19 treatment showed it shortened time to recovery. The drug, remdesivir, was reportedly one of the medications recently prescribed to President Donald Trump for his COVID-19 infection. Gilead shares rose 1.4%.
Economic Data & Policy
- Friday was a light day for economic data. U.S. wholesale inventories rose by 0.4% in August as companies began to stock up again to replace dwindling supplies.
Stocks in focus
- Microsoft and Salesforce led the Dow higher, rising 2.5% and 2.2%, respectively. Consumer discretionary and tech were the best-performing S&P 500 sectors, advancing more than 1% each. Microsoft closed the week at $215.81 while salesforce closed at $265.98.
- The Wall Street Journal reported that Advanced Micro Devices Inc (AMD) is in talks to buy rival chipmaker Xilinx Inc., in a deal that could be valued at more than $30 billion and mark the latest big merger in the rapidly consolidating semiconductor industry. AMD shares were down 4.1% closing at $83.10 while Xilinx shares rose 14% to close at $120.94.
- Kronos Bio Inc. shares rocketed 43% in their first day of trading, while shares of Shattuck Labs Inc. were up nearly 14%. Kronos Bio closed trading at $27.07 while Shattuck Labs closed trading at $19.35.
European stocks close higher as investors track U.S. stimulus talks, with shares in France leading the region.
- The pan-European Stoxx 600 Europe Index gained 0.6% to close at 370.35, the highest in more than three weeks, with basic resources and travel shares both adding 1.5% to lead gains, while autos fell 0.9%. For the week, the Stoxx 600 logged a 2% gain.
- In France, the CAC 40 was up 0.71% while London’s FTSE 100 was up 0.65% and Germany’s DAX is up 0.07%.
- On Friday, Rolls-Royce surged 14% as investors kept faith in the British airplane engine manufacturer’s rights issue announced last week. Rolls-Royce closed the week at GB 223,20.
- Pandora shares climbed more than 17% after the Danish jeweller hiked its profit guidance, leading stocks to close at 571,00 DKK.
- The London Stock Exchange agreed to sell Milan’s Borsa Italiana stock exchange to Euronext for 4.3 billion euros ($5 billion).
Asian markets finished mixed as of the most recent closing prices, tracking wall-street gains on stimulus talks.
- Mainland Chinese stocks jumped as investors returned from a weeklong break, with the Shanghai Composite rising 1.7%.
- Japan’s Nikkei 225 index rose 0.1%, while Hong Kong’s Hang Seng Index gained 0.3%.
Commodities and other assets
- Oil prices were on track to climb 10% this week as Hurricane Delta shut over 90% of production in the Gulf of Mexico. West Texas Intermediate crude decreased 1.6% to $40.54 a barrel while Brent Crude was down by 9 cents at $43.25 a barrel by 0152 GMT, having gained more than 3% on Thursday.
- Gold strengthened 1.8% to $1,928.68 an ounce, the highest in three weeks on the biggest climb in more than seven weeks.
- Copper gained 1.2% to $3.08 a pound, the highest in three weeks.
- Meanwhile, the yield on the 10-year Treasury note slipped by a basis point to 0.774%. Bond yields move inversely to prices.
Currencies
- The Bloomberg Dollar Spot Index declined 0.7% to 1,162.56, the lowest in more than three weeks on the biggest drop in six weeks.
- The ICE USD Index, a measure of the currency against six major rivals, was down 0.6% at 93.05.
- EUR rose 0.6% to $1.1824, the strongest in three weeks.
- JPY appreciated 0.4% to 105.61 per dollar, the strongest in a week on the biggest advance in more than three weeks.
Next week
- The third-quarter U.S. corporate earnings reporting season gets underway with major banks such as J.P. Morgan’s, Bank of America, Goldman Sachs, Citigroup, and Wells Fargo set to report earnings;
- Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.