S&P, Dow Break Four-Week Losing Streaks

Stocks pulled back on Friday in a session that was jam-packed with several market-moving topics, including the coronavirus, the President and the monthly jobs report.

In the end though, the major indices managed to post gains for the full week, which hadn’t been done throughout the rough month of September.  

Of course, the big story today was that President Trump and his wife tested positive for the coronavirus. So far, it seems to be a mild case and he will continue to work while in quarantine.  

Now, nobody knows how or if this will impact the election right now, nor if it will influence the odds of a stimulus package in the coming days. And that’s the problem; it adds another layer of uncertainty on these important issues.

Plus, the news was jarring and added onto fears of a second wave now that the weather will be getting cooler. Remember that the market reacted negatively to rising cases in Europe, so this obviously strikes much closer to home.

Nevertheless, the major indices took the news rather well today. The NASDAQ had a sharp decline of 2.22% (or about 250 points) to 11,075.02. However, it still gained 1.5% for its second straight weekly advance.

The losses for the other indices were more modest. The S&P was down 0.96% to 3348.42, while the Dow was down by only 0.48% (or about 134 points) to 27,682.81.

These indices were up 1.5% and 1.9%, respectively, this week. Those performances finally break four straight weeks of losses throughout September.

If it weren’t for the President getting the coronavirus, the big story on Friday would be the Government Employment Situation report. The economy added 661,000 jobs last month, which was below expectations of 800,000 and, therefore, a disappointment after several better-than-expected numbers.

But the unemployment rate did decline to 7.9%, which marks the second single-digit rate in a row.

Meanwhile, there’s still no agreement in the talks between Speaker Pelosi and Treasury Secretary Mnuchin. The House Democrats advanced a $2.2 trillion proposal last night, but it’s unlikely to go anywhere in the Senate.

Today's Portfolio Highlights:

Insider Trader: The rally in Bed Bath & Beyond (BBBY) continued on Friday, as the home goods retailer added another 9.9% on top of yesterday’s more than 25% surge! Needless to say, it was the top performer once again among all ZU services. The company reported strong quarterly results recently, which included its first comps growth since 2016. BBBY is now up nearly 124% in the portfolio since being added on July 17. The stock is at two-year highs and Tracey is wondering how long this will last. She may take some of this impressive profit off the table on Monday.

Counterstrike: "Such confusing action this week. Let's face it, we have a really hard market all of a sudden with all these headlines and uncertainties. As we approach the election, I expect more of the same as October could be a really volatile month." -- Jeremy Mullin

Options Trader: "The Employment Report also came out before the open, and that too helped underpin stocks. The headline number showed we gained 661K new jobs in the month of September. That was under the 894K consensus. But a closer look at the numbers shows private payrolls were much stronger at 877K vs. views for 900K. The 'miss' came mostly from the public sector which shed -216K jobs (which included temporary jobs such as census workers, etc.). The unemployment rate, however, dropped more than expected to 7.9% from last month's 8.4% and views for 8.2%. Although, the participation rate dipped as well to 61.4% from 61.7% and views for 61.8%.

"All in all, it was a fine report and showed the economy continues to rebound. Even though the rebound in jobs has slowed a bit, we're well above where anybody predicted we'd be 6 months ago. Roughly half of the jobs lost have been regained, and the unemployment rate has been nearly cut in half from its worst levels as well.

"The other thing helping stocks come off their lows on Friday was continued hopes for a stimulus bill. That hope was fueled when the Speaker of the House asked the airlines (which had threatened to furlough tens of thousands of workers by week's end), to hold off in doing so as aid for the airline industry was 'imminent'. By the close of trading on Friday, no such deal was available. And nobody knows what the 'imminent' deal would look like. But the word 'imminent' is a powerful word, and one can assume used only with supreme confidence that a deal is indeed coming. We shall see."
-- Kevin Matras  

Have a Great Weekend!
Jim Giaquinto

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