Pullback continues. Stocks opened lower this morning as the S&P 500 Index attempts to break its three-week losing streak that has left it more than 7% below its September 2 high. Political uncertainty following Justice Ruth Bader Ginsberg’s death has ratcheted higher and may be adding volatility on top of existing concerns about COVID-19, stimulus, US-China tensions, and tech stock valuations. European stocks were solidly lower, led down by banks. Hong Kong’s 2% loss paced broad losses in Asian markets overnight.
Recessions and recoveries. Chief Investment Officer Burt White explains what a K-shaped recovery means and how the ability to adapt may predict future successes in the new client-approved Street View video, Recessions and Recoveries Go Together.
Real-time data update. Checking in on some of the real-time economic data such as vehicle traffic, restaurant bookings, and electricity use appears to show a moderating rate of recovery as the battle against the COVID-19 virus continues. With the seasons changing from summer to fall, the potential impact of the weather on the path of the virus may begin to reveal itself. We take a closer look at several real-time indicators today on the LPL Research blog.
Week ahead. This week’s US economic calendar will bring August existing home sales and new home sales and September Purchasing Manager’s Index (PMI) from Markit on Wednesday. Initial jobless claims will be reported on Thursday, and August durable goods orders on Friday. In addition, Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin will testify before Congress on Tuesday and Wednesday.
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Technical update. After a quiet open, US equities fell throughout Friday’s session, eventually pushing the S&P 500 into negative territory for the week. The index closed at 3319 and broke below its 50-day moving average for the first time since mid-April. While stocks are down sharply again in early trading, we see next technical support for the index near the 3200 range.
COVID-19 news. On Friday new cases hit a two-week high of more than 47,000 in the United States, lifting the seven-day average 17% higher than the prior week (source: COVID Tracking Project). Cases fell Sunday week over week, while hospitalizations edged lower and are 14% below where they started September. The United Kingdom may be considering fresh lockdown measures, and France also may be headed that way.
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LPL Research Chief Market Strategist Ryan Detrick recently appeared on CNBC’s Squawk Box.
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