Down again. US stocks opened lower following Thursday’s broad weakness. Caution is in the air, as China retaliated by shutting down the US consulate in Chengdu. Asian markets were down significantly on the news. European markets are firmly in the red, even though the Eurozone flash manufacturing Purchasing Managers’ Index (PMI) surprised to the upside. The composite reading reached its best levels since February, yet another sign of global economic improvement.
No fiscal stimulus yet. Congress has not yet finalized a COVID-19 relief bill and likely won’t until next week now, according to CNBC. Senate Majority Leader Mitch McConnell said Republicans and the White House agreed in principle to the package, but need more time to review the details. With the $600 a week unemployment benefit set to expire next week, the clock is ticking, but we continue to expect a final deal by the summer recess on August 7.
LEI rises for second straight month. The Conference Board released its Leading Economic Index (LEI) report for June on Thursday, showing the series rose 2%. This is a historically impressive monthly reading, but there is still much work to be done on the economic recovery. We examine the data release, as well as its implications for future economic growth, in further detail on the LPL Research blog.
COVID-19 news. New cases in the United States totaled just under 69,000 on Thursday, down 11.1% from a week ago, though on 6.1% fewer tests (source: Johns Hopkins). The stability in the seven-day average of new daily cases—up 1.4% week over week—suggests the curve may have been flattened. The uptrend in hospitalizations has started to level off, and fatalities should follow the same path.
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