August 7, 2020 Weekly Market Recap

Taking the good news in stride, but no agreement on coronavirus relief bill.

It was a strong week for stocks, as the S&P 500 closed higher in every session for a 2.5% weekly gain. The Russell 2000 rose 6.0%, the Dow Jones Industrial Average rose 3.8%, and the Nasdaq Composite rose 2.5%.

The gains were broad, with all 11 S&P 500 sectors finishing in positive territory. The industrials (+4.8%), financials (+3.3%), energy (+3.1%), and communication services (+3.0%) sectors outpaced the benchmark index, while the health care (+0.9%) and real estate (+0.7%) sectors increased the least.

Within the communication services sector, Walt Disney (DIS) surged 11% after reporting a surprise quarterly profit and posting strong subscriber numbers for its streaming platform. Facebook (FB) gained 6%, as investors chased the stock higher in a momentum trade.

In other well-received corporate news, Microsoft (MSFT) resumed talks to acquire TikTok, and Novavax (NVAX) provided an encouraging vaccine update on a Phase 1/2 trial for healthy adults ages 18-59.

This week’s economic data continued to depict a rebounding labor market. Nonfarm payrolls increased by 1.763 million in July, the unemployment rate improved to 10.2% from 11.1% in June, and weekly initial claims decreased by 249,000 to 1.186 million for its lowest level since March.

In addition, data from the ISM showed manufacturing activity and non-manufacturing activity continued to expand in July.

Separately, Democrats and the White House remained far apart on key relief provisions and were unable to strike a deal. Treasury Secretary Mnuchin said he will recommend to President Trump signing executive orders that extend the eviction moratorium and enhanced unemployment benefits.

U.S. Treasuries declined modestly this week. The 2-yr yield increased three basis points to 0.13%, and the 10-yr yield increased two basis points to 0.56%. The U.S. Dollar Index increased 0.1% to 93.41. WTI crude futures rose 2.6%, or $1.04, to $41.17/bbl.

Source: Briefing Investor