Stock market futures turned sharply lower overnight last Thursday on reports President Trump tested positive for coronavirus. In addition to the political uncertainty this created, it heightened concerns over a second wave of the virus and led many investors to factor in a slowdown or reversal in the reopening. Along with this waking up to this news, Friday morning also presented the market with a weaker-than-expected September Jobs Report.
The United States Department of Labor reported the unemployment rate declined to 7.9% (but this was partly due to a large number people leaving the work force) and the economy added 661,000 jobs in September. The job gains were well below consensus expectations, which forecast gains of 850,000.
A less vigorous recovery in the labor market, combined with increasing coronavirus cases, and still no additional stimulus out of Washington was a bad mix of ingredients for stock prices to close the week on. All three major stock market indices closed lower Friday, with the benchmark Standard & Poor’s 500 falling just under 1%. Still, for the week as a whole, the indices posted decent gains.
The Dow Jones Industrial Average rose 1.9%, while the Standard & Poor’s 500 Index and the NASDAQ Composite each gained 1.5% on the week. The small-cap Russell 2000 Index was a notable outperformer, jumping 4.4% for the week. We can expect more volatility in the days and weeks ahead as we are in the heart of election season, entering earnings season, and tracking developments on the status of vaccines and fiscal stimulus, to name just a few.
Remember, although there is usually no shortage of news during any given week, in the long term stock prices track earnings. Investors should not let short term news (or “noise”) distract them from their long term plans! As always, don’t hesitate to contact us with any questions or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC