Market Update: Thurs, Oct 22, 2020 | LPL Financial Research

Daily Insights

Stimulus talks and election meddling. Stimulus talks will continue today, but a pre-election deal remains unlikely. US accusations of election meddling by Iran and Russia are getting heavy media coverage, adding to political uncertainty. Mostly positive earnings results continue to stream in.

  • US stocks are down slightly this morning as stimulus talks in Washington remain in focus.
  • European markets are lower at midday.
  • Asian markets finished mostly lower; Hong Kong eked out a fractional gain.

Big drop in jobless claims. Initial jobless claims fell to 787,000, well below Bloomberg estimates for 870,000. Continuing claims also beat economists’ expectations, falling for the fourth straight week to 8.4 million vs estimates of 9.6 million, according to the US Department of Labor.

Beige Book shows pace of growth tapering. The qualitative assessment of the economy in the Federal Reserve’s (Fed) Beige Book revealed that the post-lockdown recovery continued, albeit at a slower pace than we saw over the summer. As we head into the fourth quarter, sentiment may play a larger role in the path of the recovery, and it may get an extra lift as soon as election uncertainty has passed. We take a further look at the Beige Book later today on the LPL Research blog.

Leading indicators sending positive global growth signal. Globally, leading economic indexes (LEI) have improved each month since May as countries have reopened their economies despite lingering COVID-19 threats. The data indicates many countries will post strong gross domestic product (GDP) growth in the second half of the year. The strongest readings for September came from China, Korea, Brazil, and Germany, while India experienced one of the biggest improvements last month.

Q3 gains push stocks into the green. LPL Research’s Market Insight Quarterly reviews third quarter stock performance, fixed income, and commodities and gives our forecasts for the rest of 2020.

Election 2020 update. Tonight will be the final presidential debate before Election Day. The two candidates square off in Nashville, TN, hoping for a final surge of momentum before November 3. However, this presidential debate may not carry as much influence as past debates, as nearly 45 million Americans have already cast their ballot for the election, or roughly 32% of the total votes counted in the 2016 election, according to the US Elections Project.

Technical update. The S&P 500 Index has traded in a 3.6% range over the past two weeks, and the index has closed within 0.5% of the 3425 support level each of the past three days. A lack of momentum confirmation among leading sectors such as consumer discretionary and technology suggests that the consolidation of gains seen over the past two months may not be over.

COVID-19 news. New case growth in the United States on Wednesday fell week over week for the first time since October 2. The seven-day average increased 13% over the prior week and is hovering near 60,000 (source: COVID Tracking Project). The seven-day average number of hospitalizations rose just 1% over the past week after Wednesday’s week-over-week decline, an early sign of stabilization. Cases in Germany hit a new daily record. AstraZeneca and Johnson & Johnson are expected to resume vaccine trials shortly.



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