Capital 19 Catch-Up

Dow and S&P500 Snap Losing Streaks As Coronavirus Invades the White House – Plus All The Winners and Losers of the Third Quarter


It was all happening on Wall Street last week as the Dow and the S&P500 both snapped four-week losing streaks amidst a myriad of drama. We had intense negotiations over a new stimulus package, a chaotic Presidential debate, an increasing number of COVID cases, non-farm payrolls that disappointed analysts, and to finish out the week we had coronavirus invading the White House itself.

And throughout all this, markets still finished higher. The Dow led the way with a 1.9% gain over the five sessions, while the S&P500 and the Nasdaq both made 1.5% for the week. Wednesday also saw the last trading day of September, with the major indices notching up their first monthly losses since the March pandemic swoon. Tech stocks have been the hardest hit and as such the Nasdaq fared the worst of the three, losing 5.2% for the month, while the S&P500 dropped 3.9% and the Dow fell 2.3%.

Despite the falls in September all three were still way up in the third quarter. Here the Nasdaq was the standout with an impressive 11% gain and is now up 24.5% for 2020. The S&P500 came in second and gained 8.5%, now up 4.1% for the year. While the Dow made 7.6% for the quarter but is still down 2.7% so far in 2020.

In terms of stock performance, there were three clear standouts on the Dow. New component Salesforce (CRM) led the way with a 45.5% gain, while Apple (AAPL) and Nike (NKE) were not far behind with gains of 43.9% and 43.8% respectively. L Brands (LB) was the top performer on the S&P500 as it bounced back from a horror start to the year and gained a whopping 183.6%. It is only up 2.8% year to date, however. FedEx Corp (FDX) and Whirlpool (WHR) were next in line with gains of 99.6% and 84.6% respectively. Catch Up favourite Nvidia (NVDA) was fourth with a 75.8% rise. The ten worst performers were all from the energy sector with Apache Corp (APA) bringing up the rear with a 93.5% loss.

Of course, the Nasdaq was where most of the action happened and electric vehicle maker Tesla (TSLA) was the out and out winner of the third quarter, rising a hefty 245.3%. The stock is now up 342% year to date. Zoom Video owned the next best remarkable result, jumping 135.7% for the quarter, with 44.6% of that coming in September. After Nvidia, fellow chipmaker Advanced Micro Devices (AMD) was the next best with a 70.6% gain.

The previous week saw intense negotiations occurring between the Democrats and the Republicans on a second stimulus package to help out the ailing economy. The Democrats were initially looking for a $3 trillion package but this week tabled a $2.2 trillion compromise. The Republicans however still think this is too rich for their liking and want further cuts, but the signs are there that we could have a deal sooner rather than later. It would be nice to have something sorted out before election day.

Speaking of the election, we saw one of the most shambolic but intriguing Presidential debates in history throughout the week. It was riddled with arguments, interjections, name-calling, and bickering the likes we haven’t seen before. I loved every second of it. The markets didn’t find it as exciting, however. The chaos raised fears that market volatility won’t just end after the November 3 election date, especially if the result is a close one and the result is in dispute.

There is also concern over what a Biden victory would mean for markets. Love him or hate him you know what a Trump White House will bring – more of the same. With Biden, we could see tax cuts being wound back which could impinge on economic growth, but on the flip side, we would likely see better trade relations with China and a better chance of seeing increased economic stimulus. It’s going to be a fascinating month.

No less because late on Thursday the White House announced that President Trump and his wife Melania has tested positive to the coronavirus. This has thrown all sorts of new complications into what was already going to be an election lead-in like no other. Assuming the President is ok healthwise and isn’t going to suffer any long term health complications, which can’t be ruled out, how much will two weeks off the campaign trail at such a crucial time impact the election result? How many other White House staff are infected? Will there be any more debates? Will it change the Presidents view on how he handles the pandemic going forward and what is the impact this will have on the economy and the markets? So many questions and I guess we’ll find out as the drama progresses.

Elsewhere, we saw the nonfarm payrolls miss expectations on Friday, with 800,000 new jobs expected, but the actual number falling well short of this at 661,000. Unemployment was down to 7.9% from 8.4% the month before. Earlier in the week, the weekly jobless claims came in at 837,000 when 850,000 had been expected, while pending home sales were up a record 8.8% in August.

The week ahead on Wall Street will no doubt be focussed on Trump’s health, as well as the state of the oval office staff in general. Third-quarter earnings will also kick-off but we won’t see any big guns just yet. This week we’ll see reports from Domino’s Pizza (DPZ), Levi Strauss (LEVI), and Acuity Brands (AYI). Data wise we will have the Trade deficit on Tuesday, and the FOMC meeting minutes on Wednesday, with Jerome Powell also making a speech midweek and likely calling on Congress to approve a stimulus package. Nvidia will also be hosting a four-day event in which it will introduce its new range of products for the next year. It’s all happening.

Have a great week.