As is often the case, the market wrestled with a batch of (good/bad/uncertain) news last week. The biggest piece of news came from the biggest player, as Federal Reserve policy makers signaled near zero rates through 2023, in an effort to help the economy recover from the pandemic. Additional factors on the minds of investors include uncertainty regarding another round of stimulus out of Washington, concerns over economic growth in general, the path of the coronavirus, and tensions between the U.S. and China.
After volatile trading last week, the major indices all finished slightly/moderately lower, registering their third straight weekly loss. The Dow Jones Industrial Average lost less than .1%, the Standard & Poor’s 500 Index declined .6%, and the NASDAQ Composite fell .6% – with the selloff in big technology names continuing.
Facebook, Amazon, Alphabet, Netflix, Apple and Microsoft were all down more than 5%, and are all in correction territory, down at least 10% for the month. Quarterly option expiration was also in the mix last Friday, which may have added to market volatility.
Following up on a notable earnings report from last week, FedEx posted earnings and revenues that were better-than-expected, as the company benefitted from a jump in shipments related to e-commerce. FedEx is considered an economic bellwether, but with the pandemic their report may be more of an anomaly and less of an economic indicator this time around. Earnings reports of interest in the week ahead will be coming from Nike, General Mills, AutoZone and Costco Wholesale.
This week’s trading is beginning with a negative tone, as the market grapples with increasing numbers of European COVID-19 cases and reports there may be renewed restrictions on activity there. Additionally, the uncertainty regarding another round of stimulus continues to weigh on the market. As we mentioned last week, remember that corrections are normal in the stock market, and should not impact long term planning!
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