The Stock Market This Week: October 5-9
The Stock Market This Week: October 5-9
By: Stacey Nickens
On Monday, major indexes rose after President Donald Trump said he would be leaving the hospital. The S&P 500 rose 1.8% and exceeded the 3400 level during daily trading. This is the first time the index has passed the 3400 level since mid-September. The Dow Jones climbed 1.7%, and the Nasdaq added 2.3%. President Trump’s recovery seemed to be a large driver for the market’s upward trajectory; however, the market was also spurred along by hopeful news that House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin were making progress on recovery talks. Moreover, the ISM Manufacturing Index showed that manufacturing activity continued to expand in September. The index came in at 57.8% compared to August’s reading of 56.9%. All 11 S&P 500 sectors finished in the positive, with energy, information technology, and health care making the largest gains. In individual company news, Bristol Myers Squibb announced their acquisition of MyoKardia.
On Tuesday, the S&P 500 was up 0.7% in intraday trading with the help of cyclical stocks. However, when President Trump said he would delay fiscal stimulus until after the election, the index tumbled and closed with a 1.4% loss. The Nasdaq fell 1.6% due to weakness in mega-cap stocks, and the Dow Jones was down 1.3%. President Trump announced the delay in fiscal stimulus, saying that House Speaker Pelosi was not negotiating in “good faith”. However, Fed Chair Jerome Powell again reiterated the need for fiscal relief in order to sustain economic recovery. Information technology, consumer discretionary, and communication services were the worst performing sectors during daily trading. Boeing stock fell after they cut their demand forecast for commercial airplanes by 11% for the next decade. Additionally, General Electric stock fell when they announced they would face SEC action for security law violations. In economic news, the trade deficit widened in August as imports increased more than exports. August job openings also decreased.
On Wednesday, major indexes increased after President Trump backtracked and said they would try to pass fiscal stimulus through individual bills. The S&P 500 gained 1.7%. Both the Nasdaq and Dow Jones climbed 1.9%. President Trump said the standalone bills would provide relief for airlines, small businesses, and citizens. News that Eli Lilly requested emergency use authorization for their antibody treatment also helped the market rebound. All S&P 500 sectors made gains, with the biggest growth seen in cyclical materials, consumer discretionary, and industrials. As was the case Monday, the real estate sector underperformed, making only a 0.3% gain in daily trading. Among communication services stocks, Netflix made gains after Pivotal Research Group raised their price target for Netflix to $650. However, Facebook largely underperformed compared to the rest of the sector due to antitrust regulation concerns after the House antitrust committee released its report. In economic news, consumer credit contracted in August. August marked the six straight month in consumer credit contraction, an event that has not occurred since 2010-2011.
On Thursday, the S&P 500 rose 0.8% with the help of value stocks. Energy rose 3.8% as oil prices rose. Utilities, real estate, and financials all posted strong gains as well. However, information technology lagged behind with only a 0.5% gain. Due to this, the Nasdaq posted more modest gains of only 0.5%. Similarly, the Dow Jones rose just 0.4%. In individual company news, IBM stock rose and helped the technology sector after the company announced a spinoff of their IT infrastructure unit. Regeneron gained after they requested emergency use authorization for their COVID-19 antibody drug therapy, and Boeing added 2.1% following their discussions with Alaska Airlines around the airline purchasing 737 Max planes. Initial claims for the week of October 3 decreased to 840,000. However, California is still sorting through a backlog of claims, and this number does not seem to represent the entire picture.
On Friday, major indexes rose as hope for fiscal stimulus was renewed. The S&P 500 gained 0.9%. The Nasdaq rose 1.4% due to a strong performance from the information technology sector and mega cap stocks. Finally, the Dow Jones added 0.6%. The market got a small bump when reports came out that the White House was developing a $1.8 trillion stimulus package. By close, consumer discretionary and information technology had made strong gains. Energy, real estate, and utilities fell in daily trading. Strong corporate news also helped market performance. Among semiconductor companies, reports suggested AMD may be in talks to acquire Xilinx. NXP Semi raised their third quarter guidance, and Stifel upgraded Teradyne stock to a “Buy” status. In other corporate news, Gilead Sciences announced that their remdesivir COVID-19 drug seems to shorter recovery time and reduce death rates. In economic news, wholesale inventories rose 0.4% in August.
Check back daily for updates. For more information on stock market performance this week, subscribe to ELM3’s Weekly Market Update.
