Hey folks, as we wind down the summer months and Labor Day fast approaching here in the US we’ve seen one of the best rallies off the fastest bear market in US History. This past week’s US Index performance has been led by a few Tech titans, AAPL and TSLA, as we continue to set all time highs…get my take below on where the charts indicate where price action can take us next.
Weekly Sound Bites:
• The S&P 500 advanced for the fourth straight week, with technology stocks leading the index to a new record high powered mostly by AAPL and TSLA…It was a milestone that marks the roundtrip rally from lows to highs (over 52% gain) as the fastest bear-market plunge and the second-fastest bear-market recovery in U.S. history…Economic data and corporate profits released last week showed that the recovery is progressing, yet it remains uneven.
• After a 1 week reprieve, weekly jobless claims rose back up above 1 million and measures of manufacturing activity for the New York and Philadelphia regions came in below expectations…and the FEDs, in this past week’s meeting minutes, highlighted the risks that still remain in the markets…as such, they strongly encouraged the US will need more Fiscal Stimulus, which is not getting any movement in Congress…
• Existing-home sales rose by the most on record in July, boosted by low mortgage rates and low inventory. A few big-box retailers that reported second-quarter results saw profits surge during the pandemic. While these are clear pockets of strength supporting the economy and the market, unemployment remains elevated, highlighting the need for another fiscal package.
• Over the next 12 months analysts expect earnings of the S&P 500 to drop by 14.5% to $153 per share1. Additionally, the bond market looks different, too. Rates that were already low in February have declined even further as the Federal Reserve cut the federal funds rate to near zero and purchased Treasury and corporate bonds to support the economy. Economic indicators, like inflation and consumer confidence, have softened, as restrictions to economic activity due to efforts to contain coronavirus-infection rates continue to suppress consumer demand. On the supply side, industrial production, which includes manufacturing utilities and mining, is improving but is still below pre-pandemic levels, as factories continue to recover from forced shutdowns in February.
• Many analysts believe the only thing standing between a recovery and a double dip recession might be the back to school season and the degree to which schools open…As we move into September, over 56 million K-12 students will be starting a new school year like no other; on line or in person it will clearly set the tone for the US economy as we move into the fall…as the share of parents who cannot go back to work with school closures rise, the lost productivity and hit the US GDP can be upwards of 2.3% of US GDP…with child care issues rising and the absence of consistent in school learning, the costs of keeping schools closed will have a very high socio and economic impact…
Enjoy this Weekly Round-Up;
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