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Market Indexes: It was the 4th straight down week for the market, with only the NASDAQ making a gain. Small caps took it on the chin – the Russell 2000 lagged, falling -4.49%, and continues to trail the other 3 indexes by a wide margin so far in 2020.
“Wall Street’s main indexes hit their lowest in nearly 7 weeks on Monday as concerns about fresh coronavirus-driven lockdowns and the inability of Congress to agree on more fiscal stimulus raised fears about another hit to the domestic economy. Another round of business restrictions will threaten a nascent recovery in the wider economy and add further pressure on equity markets, analysts said. The first round of lockdowns in March had led the S&P 500 .SPX to suffer its worst monthly decline since the global financial crisis.The CBOE Market Volatility index .VIX, a measure of investor anxiety, shot up to its highest level in nearly two weeks.” (Reuters)
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Volatility: The VIX rose 2% this week, ending at $26.38, its highest level in 2 weeks.
High Dividend Stocks: These high dividend stocks go ex-dividend next week: CIM. AGNC, ACRE, BGS, CGBD, EARN, EFC, NHI, NLY, HGH, UBA.
Market Breadth: Just 7 out of 30 DOW stocks rose this week, vs. 16 last week. only 25% of the S&P 500 rose, vs. 60% last week.
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Economic News: “The number of Americans filing new claims for unemployment benefits unexpectedly increased last week, supporting views the economic recovery from the COVID-19 pandemic was running out of steam amid diminishing government funding.
Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 870,000 for the week ended Sept. 19. Data for the prior week was revised to show 6,000 more applications received than previously reported. Economists polled by Reuters had forecast 840,000 applications in the latest week.Six months after the pandemic started in the United States, jobless claims remain above their 665,000 peak during the 2007-09 Great Recession.” (Reuters)“U.S. federal debt held by the public will balloon to about 195% of the country’s economic output in 2050, from about 98% at the end of 2020 and 79% in 2019, the Congressional Budget Office projected on Monday.
The CBO, in its annual Long Term Budget Outlook, said that increased federal government spending associated with the coronavirus pandemic has accelerated the growth of U.S. budget deficits and debt.The nonpartisan budget referee agency said that the 2020 deficit is projected at 16% of U.S. GDP, and the share will fall for several years, but will begin rising sharply again by 2028.” (Reuters)“Failure to deliver more government aid to households could precipitate a wave of mortgage defaults and evictions, Federal Reserve Chair Jerome Powell said on Thursday in a fresh warning amid a continued deadlock in Congress over another coronavirus relief package.
While households are spending now, perhaps using what’s left of money from the $2.3 trillion package passed by Congress in March, “the risk is they will go through that money, ultimately, and have to cut back on spending and maybe lose their home or their lease,” Powell said in testimony before the Senate Banking Committee.” (Reuters)
“U.S. orders for durable goods increased in August at a slower pace than expected, restrained by declines in bookings for motor vehicles and military equipment, though a gauge of business investment rose more than forecast.
Bookings for durable goods — or items meant to last at least three years — increased 0.4% from the prior month after an upwardly revised 11.7% jump in July, Commerce Department data showed Friday. The median estimate in a Bloomberg survey of economists called for a 1.5% gain in August.” (bloomberg)(MarketWatch)
Week Ahead Highlights: The closely watched monthly Payrolls Report is due out on Friday. This should be the last payrolls report before the US election.
Sectors: Utilities this week, with Energy lagging.Futures: WTI fell 3.1% this week, finishing at $40.04. Natural Gas rose 36.91% this week.“Oil futures rose on Thursday to tally a third straight session gain, finding support from signs of tighter crude supplies, even as concerns that rising cases of COVID-19 will lead to weaker energy demand remained. Natural-gas futures, meanwhile, stretched their rally to a 2nd session, tacking on nearly 6%, with forecast for colder weather boosting demand prospects for the fuel.” (MarketWatch)“Nearly two-thirds of U.S. energy company executives polled by the Federal Reserve Bank of Dallas believe U.S. crude oil production has peaked, according to a survey released on Wednesday.The COVID-19 pandemic has knocked global oil demand and prices, prompting deep cuts in drilling this year by shale oil producers. The United States last pumped 12.2 million barrels per day, taking top spot in global crude oil output. Survey results said 66% of 154 oil and gas firm executives contacted by the Dallas Fed this month believe U.S. crude oil production has peaked. The survey includes executives from Texas, Louisiana and New Mexico.” (Reuters)