Market Update: Thu, Oct 8, 2020 | LPL Financial Research

Daily Insights

Stocks opened higher. Sentiment is getting a lift this morning from speculation that piecemeal stimulus, if not more, may be forthcoming as Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi are slated to talk again today. Markets also may be getting more comfortable with election risk with Election Day just 26 days away. The vice presidential debate probably didn’t move the needle. Asian markets were mixed with Japan’s Nikkei solidly higher, while Hong Kong’s Hang Seng edged lower, and China’s market was closed for a holiday. European markets are slightly higher in midday trading.

Jobless claims miss. Weekly jobless claims missed analyst expectations, with 840,000 Americans filing versus Bloomberg expectations for 820,000 (US Department of Labor), while the prior week’s number was also revised slightly higher. Despite coming in slightly higher than analyst expectations, weekly filings were lower than the four-week average of 857,000. Continuing claims fell to 10.98 million, a decline of 1 million from the week prior, while nearly every state had fewer continuing claims than last week’s print. However, survey data continues to note a backlog in filings in California, which may skew the data in the future as filings in the state are processed.

Could stimulus deliver an October surprise? Stocks have been very sensitive to the on-again-off-again stimulus talks in Washington, DC. With a potential infusion of 9% of US gross domestic product (GDP), an agreement—though unlikely before Election Day—would be a big deal. We share our thoughts on stimulus prospects later today on the LPL Research blog.

US trails Europe and Japan in stimulus. As a percent of GDP, fiscal stimulus packages enacted in Japan (over 40%), Italy and Germany (over 30%), and France (roughly 20%) are well above the roughly 12% that’s been delivered in the United States to date, according to data compiled by Ned Davis Research. We believe this comparison further underscores the need for more US stimulus.

Pre-election special edition. LPL Research’s Ryan Detrick, Jeff Buchbinder, and Barry Gilbert take a look at the many factors driving this election, including the economy to the stock market, COVID-19, the Supreme Court battle, jobs, and more. Watch the Market Signals special edition, Pre-Election Preview.

Columbus Day holiday. Monday, October 12, is Columbus Day and a federal holiday. Stock and bond markets and LPL Financial will be open for business as usual.

Technical update. Markets quickly erased Tuesday’s late-day sell-off, as the S&P 500 Index jumped 1.7% Wednesday, closing at 3419. Markets are higher in early trading today, and almost any marginal gain will be enough to clear the mid-September highs at 3425. The index remains roughly 4% below the record high close of 3581.

COVID-19 news. After three straight days below 40,000, new cases in the United States rose 14% week over week on Wednesday to over 50,000, leaving the seven-day average increase at about 4% (source: COVID Tracking Project). Hospitalizations, which can be volatile day to day, were highest since mid-August, suggesting the recent downtrend is at risk of reversing. France and Spain reported record increases in cases while Germany’s reached a more than five-month high. Lilly and Regeneron have submitted their antibody treatments for emergency use authorization.



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