1:30 PM EDT - The stock market is plummeting as the final week of October gets under way. And the problem is not economic releases or new business-related headwinds.
Rather, what rattling investors is the inability of the Treasury Secretary and Speaker Nancy Pelosi to come to terms on a new stimulus package and the news that Friday and Saturday marked the highest two days for COVID-19 cases since the pandemic struck in March. In all, each day saw more than 83,000 new incidences of this infection with no tapering off in sight.
As to the stock market, the Dow Jones Industrial Average now is off 860 points, bringing the blue chip composite down to below 27,500. The S&P 500 Index is down by 88 points and the NASDAQ is lower by 280 points. There is no place to hide.
As to the economy, data issued this morning showed that sales of new homes eased slightly in September, but not enough to influence investors. That metric followed an encouraging release last week on existing home sales. – Harvey S. Katz, CFA
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Friday saw an inauspicious end to an unimposing week on Wall Street, with the stock market up initially, down through the middle portion of the session, and then largely range-bound, with little aggregate change into the close. Shifting sentiment on a possible stimulus deal out of the Congress, rather than the economy and other fundamentals largely told the tales of the tape.
Essentially, the Street has been preoccupied with the ebb and flow of news out of Washington for weeks now, as the election draws ever nearer and the need for fiscal stimulus becomes more urgent as total cases of COVID-19 infections rise--hitting an all-time high on Friday and Saturday--and deaths continue to mount. The rise in coronavirus cases also is now unsettling investors.
As for the equity market, there were no economic reports out that could have influenced traders, although as noted, few investors are focusing on the nation's economy these days, as the issuance of two key reports on Thursday--a survey showing a surprising decline in weekly jobless filings and another indicating a solid gain in existing home sales did little to embolden investors.
Regarding the latest market session, the Dow would wax and wane before finally ending down by 28 points. Meantime, the S&P 500 would add 12 points and the NASDAQ would be better by 42 points. Regarding the negotiations in Washington, Speaker Pelosi still suggests that a deal could get done before Election Day, now just over a week away.
Still, with members of both parties in Congress continuing to be far apart on the magnitude of the spending package and on the specific details, a deal before November 3rd is getting less and less likely. So we go into the new trading week with unanswered questions on both the fiscal stimulus deal and the economy. The days ahead will hopefully provide some answers.
Regarding the week at hand, we will get figures out this morning on new home sales for September. Readers will recall that last week saw the release of upbeat data on existing home sales. We could get an encore today. Then, tomorrow, reports on orders for durable goods and consumer confidence will be out.
The beat continues on Thursday with the week's key release, as the government issues its first or advance look at third-quarter GDP. After back-to-back setbacks in the first and second periods, the most recent span should have produced a major uptick, with growth perhaps exceeding a record 30%... We caution, however, that this latest tally will be off of a very low base. Finally, Friday's calendar includes issuances on personal income and consumer sentiment.
Looking at the upcoming day's trading, the market seems set to open the last full week of October to the downside on concerns about the troubled talks in Washington and the record number of COVID-19 cases on Friday and Saturday as well as projections that daily cases could rise to over 100,000 shortly. – Harvey S. Katz, CFA