Markets opened higher. US equities opened higher, bucking the trend from Thursday’s mixed trading. The bulls are taking the lead this morning, brushing aside the resurgence of COVID-19 cases in Europe. House Speaker Nancy Pelosi and US Treasury Secretary Steven Mnuchin cited progress on the next stimulus bill, but few expect a breakthrough soon. Asian markets ended their trading session mixed, with the Hang Seng the standout performer. European equities are firmly higher in midday trading.
Seasonal distortions help support retail sales. Retail sales were robust in September, rising 1.9% month over month compared to Bloomberg economists’ median expectation of 0.8% (source: US Census Bureau). The increase was another data point supporting a more robust than expected third-quarter rebound from the COVID-19 recession. Delayed back-to-school spending may have created seasonal distortions in the data, as September is usually a weak month following back-to-school spending in August. The Federal Reserve Bank of Atlanta’s gross domestic product (GDP) forecasting model estimated annualized GDP growth of 35% in the third quarter before even taking into account the Friday morning report. The initial estimate of third quarter GDP will be released Thursday, October 29.
Charts we are watching. This has been a big week with many interesting charts, so we will show a few of our favorites today. From stocks going historically oversold to overbought in a short time, to more travelers flying, to presidential candidate Joe Biden’s potential spending initiatives, we’ll break it down later today on the LPL Research blog. You can find even more election-related charts at LPL Research House of Charts Elections 2020.
Technical update. Major indexes closed in the red Thursday, but selling was much more benign under the surface as both the S&P 500 Equal Weight Index and Russell 2000 Index posted gains for the day. Even the S&P 500 finished more than 1.2% above its intraday lows, closing at 3483. For now, the index remains in range between the early September all-time highs (3588) and support at 3425.
COVID-19 news. New cases in the United States have risen by double-digit percentages for nine straight days, while the seven-day average is up 16% over the prior week to more than 53,300 (source: COVID Tracking Project). Hospitalizations dipped slightly on Thursday versus the prior week, but the seven-day average is still 43% higher week over week. US hotspots include the Dakotas, Wisconsin, Montana, and Nebraska. Cases may have peaked in Spain, but spread across the rest of Western Europe has continued largely unabated. The Wall Street Journal reported that Pfizer may be ready to apply for emergency-use authorization of its vaccine by late November.
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