Market Update- August 17, 2020
The Week on Wall Street
Stock prices drifted higher in an otherwise quiet news week, as a slowdown in new COVID-19 cases outweighed a Congressional impasse on a new fiscal-spending measure.
The Dow Jones Industrial Average gained 1.81%, while the Standard & Poor’s 500 rose by 0.64%. The Nasdaq Composite Index inched 0.08% higher for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, advanced 3.11%. i, ii, iii
S&P 500 Nears All-Time High
Stocks prices were supported by a falling rate of COVID-19 cases nationwide and optimism that – despite a lack of progress on a fiscal-aid bill – Congress would eventually come to a spending agreement. iv
The industrial and financial sectors saw solid gains, while technology stocks, after slipping earlier in the week, found some footing as the week came to a close.
The S&P 500 Index flirted all week with setting a new record high. At one point on Thursday, it traded above its February 2020 record close before closing slightly lower. Stocks treaded water into Friday, as Congress recessed for the summer. v
Consumer Prices Jump
On Wednesday, the Labor Department said that the Consumer Price Index rose 0.6% in July, matching the 0.6% increase in June. The increase was double the consensus estimate of 0.3%. The general view is that the acceleration in consumer prices is more indicative of a healing economy than the beginning of a cycle of higher inflation. vi, vii
The Fed does not appear concerned about these recent monthly price jumps. It remains more worried about disinflation. However, if inflation continues to pick up, the Fed may be forced to reconsider its COVID-19 monetary policy. viii
THIS WEEK: KEY ECONOMIC DATA
Tuesday: Housing Starts.
Wednesday: Federal Open Market Committee (FOMC) Minutes.
Thursday: Jobless Claims. Index of Leading Economic Indicators.
Friday: Existing Home Sales.
THIS WEEK: COMPANIES REPORTING EARNINGS
Monday: JD.com (JD).
Tuesday: Walmart (WMT), The Home Depot (HD), Kohls (KSS).
Wednesday: Nvidia (NVDA), Target (TGT), Lowe’s (LOW).
Thursday: Alibaba Group (BABA).
Friday: John Deere (DE).
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i The Wall Street Journal, August 14, 2020
ii The Wall Street Journal, August 14, 2020
iii The Wall Street Journal, August 14, 2020
iv CNBC, August 12, 2020
v CNBC, August 13, 2020
vi The Wall Street Journal, August 12, 2020
vii The Wall Street Journal, August 12, 2020
viii CNBC, August 12, 2020