Economic Market/Portfolio Happenings
Hello and welcome to this week’s Jones Financial Blog! Our goal at Jones & Associates is to help keep you up to date with interesting current economic/market happenings as well as some proprietary portfolio happenings. Knowledge is power and thought we would share some of ours with you. Enjoy!
All data is for the week ended September 18, 2020.
The broad market index, the S&P 500, declined 0.60% as the NASDAQ eased 0.53% while the key indicator of small stocks, the Russell 2000, gained 2.68%. Overseas, both the developed markets (MSCI EAFE) and emerging markets (MSCI EM) registered gains of 0.79% and 1.59%, respectively. Within the U.S., energy and industrials were the best performing sectors while consumer discretionary and communication services were the worst performers. (1)
The Fed is now seeing a 3.7% decline in GDP with the unemployment rate at 7.6% by the end of the year, rates that are much improved from its June forecasts based on the August jobs report. In addition, at its Open Market Committee meeting the Fed tweaked its wording to emphasize its new thinking that the central bank can maintain accommodative (lower interest rates) monetary policy for longer, given its positive effect on increasing the labor force and growing the economy without substantially raising inflation. (2)
Oil prices rose after a report that U.S. crude inventories fell 4.4 million barrels in the prior week, significantly larger than the consensus estimate for a drop of 1.8 million barrels. (3) The price of West Texas crude rose 10.7% to $41.32 per barrel.4
Retail sales in August were up for the third consecutive month, rising 2.6% from the same period a year ago, although they missed consensus expectations and the prior month’s growth rate was lowered slightly. Online sales were up more than 22% from a year ago. Back to school sales were indicated down sharply as clothing and accessories were down nearly 20% from a year ago. This data offers the first picture of consumer spending after the expiration of $600-a-week in emergency jobless benefits. (5)
The U.S. consumer sentiment index in September rose to 78.9, the best level since March and up from 74.1 in the prior month. This was 3 points better than the consensus estimate and may be an indicator of improving retail and restaurant sales in the coming weeks. (6)
A key indicator of manufacturing—the NY Fed’s Empire State index – rose 13.3 points to 17 for September, well ahead of expectations and the third consecutive improvement in the index. Any reading above zero indicates improving conditions. The measures for orders, shipments and optimism for the coming six months all rose. (7)
Proprietary portfolio happenings:
Apple Inc. (AAPL), a Core Select holding, hosted a new products launch event. While it lacked some of the usual excitement that surrounds the iPhone, but the new subscription-based services from Apple could provide an additional revenue boost for the company. Shares were down 4.6% for the week. (8)
Five Below Inc. (FIVE), a G33 and Core Select holding, is a specialty retailer offering a range of items for teens and pre-teen customers mostly priced at $5 or less. Last week, the company opened its 1,000th store (in Houston, TX). Shares were up 5.0% for the week. (9)
Microsoft Corp. (MSFT), a Core Select holding, announced a 10% dividend increase. Yield on the new rate is 1.11%. (10)
Did You Know? Sphenopalatine ganglioneuralgia is the medical term for brain freeze.
Sources: (1) JP Morgan Weekly Market Recap 9-21-20, (2) Federal Reserve Open Market Committee report 9-16-20 (3) US Energy Administration Weekly Petroleum Report 9-16-20. (4) Oilprice.com 9-21-20, (5) Commerce Department press release 9-16-20, (6) University of Michigan Survey of Consumers 9-18-20, (7) Federal Reserve Bank of New York Empire State Manufacturing Survey 9-15-20, (8) Wall St. Journal, “Apple Unveils New Watch, Fitness Service) 9-15-20 9 Five Below Inc. press release 9-11-20, (10) Microsoft Corp. press release 9-15-20