THIS WEEK'S UPDATE

The Week on Wall Street
Stocks were mixed last week as worries that stretched from Washington D.C., where prospects of a new fiscal stimulus bill dimmed, to Europe, which saw an increase of new COVID-19 cases.
 
The Dow Jones Industrial Average declined 1.75%, while the Standard & Poor’s 500 fell 0.63%. The Nasdaq Composite index gained 1.11% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 4.20%. , , 
 
Late Friday Rally Pares Losses 
Dwindling chances of a federal fiscal stimulus, pre-election jitters, and worries over a second wave of coronavirus infections in Europe weighed heavily on investors. 
 
The weakness in technology persisted. The Department of Justice proposal to curb legal protections for internet companies and require them to take greater responsibility for the content on their sites adding to that sector’s woes. 
 
Energy stocks were also hit hard on concerns of a slowdown in economic growth hurting oil demand.  
 
The week wasn’t entirely absent of good news. Investors focused on reports of new progress in developing a vaccine and the passage in the House of Representatives of a bipartisan continuing resolution bill to fund the government through December 11th. 
 
Absent any apparent catalyst, stocks rallied in the final days of the week, cutting losses on major indices and powering the NASDAQ Composite to a weekly gain.
 
Fiscal Stimulus on Life Support
Market hopes for an additional fiscal stimulus bill, which were already fading, suffered another setback as events in Washington, D.C., appeared to make it more unlikely that lawmakers and the president could come together to fashion a compromise spending bill.
 
Many economists and market observers, along with Federal Reserve Chairman Jerome Powell, believe that further spending may be needed to maintain the momentum of the current economic recovery. 
 
THIS WEEK: KEY ECONOMIC DATA
Tuesday: Consumer Confidence Index.
Wednesday: ADP (Automated Data Processing) Report. Gross Domestic Product (GDP).
Thursday: Jobless Claims. 
Friday: Employment Situation. Factory Orders.
 
THIS WEEK: NOTABLE COMPANIES REPORTING EARNINGS
Tuesday: Micron Technologies (MU), McCormick (MKC)
Thursday: Constellation Brands (STZ), Pepsico (PEP), Conagra Brands (CAG)
 
Final Thoughts
Volatility has been closely correlated to news headlines all year. So much so, that we have entered a spectrum of time where emotions and second-guessing could override fundamental data-based analysis. When all is said and done, the month of September may record more of a "queasy" than a "panic" performance.
 
In case you weren’t aware there’s an election coming up soon.  There is even a much anticipated debate happening Tuesday evening.  There have been and will continue to be all kinds or projections by “experts” about what is going to happen in the months ahead. However, let's talk about future projections in the context of present-day reality. We need to revert to our question of "not if, but when" will this nation have final results on the elections. We cannot expect markets to perform in isolation from reality. Economic policies are in the realm of politics and these policies will dictate the science (not the art) of market performance. Once we diminish the emotional side of the brain and go back to the rational analysis of fundamental data, we can regain a valid sense of trend direction.

A lot has been spewed out about a possible Armageddon, uncontrollable violence, and loss of civility, but this nation has three equal powers of government, and when one breaks down, the two others are capable of restoring order and adjudicating impartial justice. So, it took a couple of months to decide the 2000 Bush-Gore election, but we did, and markets did not crash. If you were in the market in December 2000, and remained engaged to the present, you have done well despite the bumps along the way.
 
My advice… know there’s bound to be some volatility in the next few months and there is much nauseating political gamesmanship afoot.  Also know America will move beyond these elections and this Covid pandemic to conquer other things as a nation and will continue to prosper.  We made it through a revolution, a civil war, we rose out of a depression and defeated an axis of evil halfway around the world, we survived terrorist attacks on American soil and still managed to have the strongest economy the world has ever seen all along the way.  We will be fine.  Stay strong and maintain your resolve.

Kind regards,