Weekly Market Update
Thursday, 19 November 2020
Third quarter earnings season has largely concluded, with S&P 500 earnings per share falling 6.6% according the FactSet, significantly better than the anticipated drop of roughly 20% by analysts as of September 30th.
Additionally, 84% of companies beat earnings estimates, which was the highest reading since 2008 when FactSet began tracking the metric. The company also noted that the coronavirus outbreak was an important topic for the season, with 444 companies in the S&P 500 mentioning “COVID” at least once on earnings calls. This week, investors continue to grapple with rising coronavirus cases around the globe and positive vaccine news. The S&P 500 Index returned 1.3%, though down from Monday’s high of $3,626.91. Shares of economically-sensitive industries regained momentum, including energy, industrials, and financials, with the vaccines successes for Moderna and AstraZeneca. Moderna’s vaccine has a reported effective rate of 94.5%, and AstraZeneca appears to generate a positive immune response for older patients with final results expected in roughly a week. Pfizer announced updated results of 95% effectiveness, up from 90% reported last week. Small-cap stocks rose over 4%, and large-cap value stocks gained nearly 2.5%. Stay-at-home technology companies, such as Zoom, lagged behind, as did defensive sectors such as utilities and consumer staples. Abroad, European shares rose nearly 1.5% on news that a breakthrough between the U.K. and E.U. on Brexit could be reached as early as next week. Japanese stocks fells after Tokyo reported a record number of new COVID-19 cases.
Fixed income indices managed to rise despite the gains in equities. The yield on the 2-year U.S. Treasury note fell one basis point to 0.16%, and the benchmark 10-year Treasury note fell five basis points to 0.83%. $27 billion in 20-year bonds were auctioned along with $12 billion in 10-year TIPS this week. Bond yields fall as prices rise.
With global COVID-19 cases topping 56 million, numerous countries and U.S. states are imposing additional restrictions. California, New York, Ohio, Minnesota, Illinois, and Pennsylvania enacted new policies aimed at stemming the spread of the virus, however, the COVID-19 adviser to former VP Joe Biden, the projected winner of the 2020 Presidential Election by a number of media networks, reversed from a prior suggestion that a four- to six-week economic shutdown was needed to control the spread of the virus. Additionally, the WHO Europe director stated that lockdowns should only be used as a “last resort”. Retail sales rose an as-expected 0.3% in October, helped by a very strong Amazon Prime Day. Excluding autos and gas, the rise in sales fell short of expectations at 0.2%. The readings overall were held back by department store sales, which fell 4.6%. Existing home sales rose 4.3% to the highest level since before the financial crisis, with the housing market essentially making up for weak sales from the spring at the start of the pandemic.
Read the full November 19, 2020 report with accompanying charts and graphs.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or financial advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
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