Weekly Market Review: Volatility Returns at Month-End

Updated: Nov 19, 2020

averages fell 5% to 6% across the board, led by Technology and Industrial names. The price of crude oil also noticeably dropped more than 10% this week, as long-term U.S. Treasury yields continue to press higher. There are multiple reasons why stocks may be selling off, but they all point to the prospect of slower business/economic growth in the coming quarters: 1) Resurging coronavirus cases across the globe; 2) Delay in another round of U.S. economic relief; 3) Increasing likelihood of Biden winning the U.S. Presidential election on Nov. 3, which would likely lead to higher taxes.

Coronavirus Update

While it may no longer be the top news story in the financial press, the coronavirus pandemic is still with us. Pfizer (PFE) delayed results of its vaccine trials this week. The U.S. also reported record new cases of more than 90,000 and 100,000, respectively, on Thursday and Friday. During the week, France and Germany announced that new business restrictions would be re-enacted. The U.K. declared its own stay-at-home order on Saturday, the same day that New York State announced strict testing and quarantine rules for visitors. If the pandemic continues to spread, it could hamper the positive trajectory of the economic recovery reported in recent months.

What to Expect Next Week

All eyes will be on the U.S. Presidential election on Nov. 3. The majority of polls and election simulations suggest that Joe Biden is leading, however President Trump won from a similar position four years ago. It also appears increasingly likely that the winner(s) of the national elections may not be clear on the morning of Nov. 4. Any uncertainty in this realm could continue weigh heavy on investor confidence. Looking ahead to next week, 129 companies in the S&P 500 are expected to post results. Bristol Myers (BMY), CVS Health (CVS), General Motors (GM), Marriott (MAR) and Qualcomm (QCOM) are among the names headlining the earnings calendar. 86% of the 319 companies in the S&P 500 that posted results so far have exceeded expectations, which is above the average of 73% over the past four quarters. On the economic front, we’ll get the October jobs report on Friday. Estimates call for the addition of 600,000 non-farm payrolls last month and for the headline unemployment rate to tick down to 7.8%. The renewed volatility this past week is a reminder that economic growth and equity valuations face headwinds, as we look toward 2021. Following the snap-back recovery in stocks from March lows, we believe that investment gains will be harder to come by in future months. As a result, deciding what and when to buy can be challenging for any investor. However, the fact remains that attractive investments are out there, if you’re willing to dig a little deeper. One such Retail name is worth a closer look and is our Stock of the Week.





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