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Stock Market News for Oct 19, 2020

The Dow and the S&P 500 closed higher on Friday, lifted by upbeat retail sales data and improvement in consumer sentiment. However, the tech-laden Nasdaq ended in the negative territory. Notably, rise in new coronavirus cases that led to travel restrictions dampened investors sentiment, and compelled them to refrain from placing bets on risky tech stocks.

The Dow Jones Industrial Average (DJI) edged up 112.11 points, or 0.4%, to close at 28,606.31 and the S&P 500 rose 0.47 points, to close at 3,483.81. The Nasdaq Composite Index closed at 11,671.56, declining 42.32 points, or 0.4%. The fear-gauge CBOE Volatility Index (VIX) increased 1.6%, to close at 27.41. Advancing issues outnumbered declining ones for 1.22-to-1 ratio on the NYSE and a 1.37-to-1 ratio on the Nasdaq favored advancers.

How Did the Benchmarks Perform?

The Dow’s heavyweight component The Boeing Company BA rose 1.9% on Friday after Europe’s aviation regulator said that Boeing’s 737 Max jet is safe to fly again. Additionally, a 2.3% and 1.6% jump in Caterpillar Inc. CAT and UnitedHealth Group Incorporated UNH, respectively, also helped the blue-chip index close higher.

Of the 11 major sectors of the S&P 500, seven ended in the green, led by a 1.1% and 1% rise in utilities and health sectors respectively. The health sector got a boost from positive news in the coronavirus vaccine development front. Shares of Pfizer Inc. PFE jumped 3.8% after the company announced that it could have a late-stage experimental coronavirus vaccine ready by late November for emergency-use authorization.

The Nasdaq and the S&P 500 technology sectors was weighed down by nearly 2% decline in shares of Amazon.com, Inc. AMZN. Investors showed concerns over the sales from Amazon’s Prime Day event. Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Sell) stocks here.

On Friday, the S&P 500 posted 50 new 52-week highs and no new lows, while the Nasdaq Composite recorded 91 new highs and 15 new lows.

Retail Sales Ticked Up in September

On Oct 16, the Commerce Department reported that retail sales soar for the fifth month in a row in September, rising 1.9%. The figure surpassed the previous month’s jump of 0.6% and is above the consensus estimate of 0.8%. The report suggests that the rise in retail sales was highly attributed by Americans buying more clothes, cars and trucks and dining out.

Sales in clothing stores jumped 11%, while sales rose 3.6% at auto dealers. Additionally, sales at bars and restaurants rose 2.1% and sales at the department stores witnessed almost 10% rise. September’s report shows that retail sales have snapped back quickly to pre-pandemic levels at a faster than expected pace.

Consumer Sentiment Edge Up in October

Per the University of Michigan’s report on Friday, the preliminary reading of consumer sentiment index has increased to 81.2 in October, higher than the consensus estimate and September’s reading of 80.4. The report states that the index has hit its highest level since March, when the coronavirus pandemic slammed the US economy.

A sub-index that measures expectations for the next six months rose to 78.5 from 75.6 in September. The slight increase in October has been due to stronger economic growth and faster hiring. However, a sub-index that measures current conditions slipped to 84.9 in October from 87.8 in the month before, and indicates that Americans are closely watching the increase in COVID-19 cases.

Industrial Output Drops in September

On Friday, the Federal Reserve reported that industrial output fell 0.6% in September, its first decline after four straight months of gains. September’s decline came as a surprise to economist who expected a steady growth in the sector, the consensus estimate pointed at a 0.6% gain.

The report shows that the decline was widespread in September, with a 0.3% and 4% decline in manufacturing and output of motor vehicles and parts, respectively, while utilities output declined 5.6%. The capacity utilization rate that reflects the limits to operating the nation’s factories, mines and utilities fell to 71.5% in September, after rising to revised figure of 72% in August. 

Weekly Roundup

For the week, the Dow, the S&P 500 and the Nasdaq edged up 0.1%, 0.2% and 0.8%, respectively, ending the volatile week in green. Both the Dow and the S&P 500 notched their third straight weekly gain, while the Nasdaq posted a winning streak for the fourth consecutive week.

Rise in coronavirus cases across the globe, French government declaring a public health state of emergency and uncertainties over further coronavirus stimulus in the United States, put stocks through a roller coaster ride over the week.

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UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report
 
The Boeing Company (BA): Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Caterpillar Inc. (CAT): Free Stock Analysis Report
 
Pfizer Inc. (PFE): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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