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 October 9, 2020. U.S. bond markets are closed today in observance of Columbus Day while the stock markets are open.
Markets were up strongly last week driven by stimulus talks and strong economic data just prior to the start of earnings season which could surprise to the upside. The S&P 500 rose 3.89%, the Russell 2000 advanced 6.40% and the NASDAQ gained 4.57%. Overseas, the developed markets index (MSCI EFA) rose 2.98% while emerging markets (MSCI EM) added 4.57%. Materials and energy were the best performing sectors while real estate and communications services were the laggards. Growth stocks outperformed value stocks, and small caps were the best performers by size. (1)
Interest rates rose and bond values fell across all maturities, with the benchmark 10-year treasuries up 9 basis points to 0.79%. (1) Much of the rise in rates can be attributed to expectations for a faster growing U.S. economy as it benefits from a stimulus package.
West Texas crude oil rose 9.6% last week to $40.60 per barrel (2) as 80% of oil production was shut down, threatened by another hurricane in the Gulf of Mexico this past weekend. Additionally, a strike by oil workers in Norway has slowed production of Brent crude in the North Sea. (3)
Weekly initial claims for unemployment were ahead of estimates at 840,000. Nearly 11 million people continue to claim unemployment insurance. (4)
ISM Services Index for September grew for the fourth consecutive month, to 57.8%, a 0.9% gain from the prior month with growth across 16 out of 17 sectors. It is significantly ahead of expectations for a reading of 56.2%. The strongest subset of the index was new orders, rising 6.5% while the backlog of orders has been catching up. Employment grew for the first time in seven months. (5)
Proprietary portfolio happenings:
Bristol-Myers Squibb Co. (BMY), a Core Select and G50 holding, agreed to acquire cardiovascular drug developer MyoKardia (MYOK) for $13 billion in cash. BMY plans to utilize its strength in other pharma products manufacturing and distribution to develop MyoKardia’s portfolio of heart disease therapies. (6) Shares of BMY rose 5.3% for the week.
Eli Lilly & Co. (LLY), a Core Select and G50 holding, submitted its COVID-19 monoclonal antibody combination therapy treatment to the FDA for an emergency use authorization for hospitalized patients. Lilly stated it has the capacity to make 1 million doses in the current quarter. (7) Shares rose 8.0% for the week.
McDonald’s Corp. (MCD), a G50 holding, raised its dividend by 3% while announcing their monthly comparable store sales improved sequentially across all segments. (8) Shares yield 2.3% on the new rate.
Paychex Inc. (PAYX), a G50 holding, announced quarterly results that beat expectations and management guided earnings for the coming quarters higher than the consensus estimates. (9) Shares rose 3.7% for the week.
Did You Know? An acceptable mail-in voting ballot varies by state; what counts in one state could be rejected in another. For example, some states require witness signatures or copies of identifications. Several states have relaxed prior policies because of the virus. Many states normally accept mail-in ballots received after Election Day that are postmarked by a certain deadline (and even more states than usual are doing so in 2020).
Sources: (1) JP Morgan Weekly Market Recap 10-12-20 ,(2) Oilprice.com, (3) Barron’s, “Oil Ticks Higher as Supply Fasces Risk…” 10-8-20, (4) US Department of Labor 10-8-20, (5) ISM Services Survey 10-5-20, (6) Bristol Myers Squibb press release 10-5-20, (7) Eli Lilly & Co. press release 10-8-20, (8) McDonald’s press release 10-8-20, (9) Paychex press release 10-6-20