The health and economic fallout from COVID-19 intensified last week. The number of daily new cases rose 15% week-over-week. Initial weekly jobless claims rose to their highest level as new lockdown restrictions weighed on businesses. Congress continued to wrangle over the elements of a new fiscal stimulus package.

The COVID-19 health toll worsened, with the nationwide count of daily new cases rising 15% from the previous week to 215,000. The total number of U. S. patients hospitalized for COVID-19 exceeded 110,000, a record. The number of daily new deaths from COVID-19 exceeded 3,000 to set a new record.

Economic data reflected the strain from new lockdown restrictions to stem the recent surge of the pandemic. As unemployment increased, initial weekly jobless claims surged to their highest level since September.

Despite the need for additional economic relief, lawmakers continued to wrangle over a new fiscal stimulus package. A bipartisan $908 billion pandemic package remained stuck in Congress as Senate Republicans pushed for a smaller relief bill. Congress, however, passed a one-week spending bill to keep the government open through December 18 and provide lawmakers more time for negotiating COVID-19 relief.

The U. S. FDA approved the COVID-19 vaccine developed by Pfizer and BioNTech after the stock market closed on Friday. The vaccine should roll out next week.

For the week ending December 11, the S&P 500 (SPY) fell 1.0%.

All sectors except energy lost ground.
 

Leaders and laggards for the week ending December 11, 2020.

In addition to energy (XLE), communication services (XLC) and utilities (XLU) held up better than the S&P 500.

Real Estate (XLRE), financials (XLF), and information technology (XLK) lost more than the benchmark.

The number of declining stocks in the S&P 500 trounced the number of advancers by a 5-to-2 ratio.

The S&P 500’s top 10 winners included companies from the communication services, industrials, and energy sectors. Positive business updates contributed to the gains in many winners.

1. Communication Services:

Disney (DIS) shares rose 14%, claiming the top spot among the S&P 500 winners for the week. The entertainment giant said its Disney+ streaming service has over 86 million subscribers. Disney also rolled out its streaming strategy, including a slate of new shows and forecasted Disney+ subscriber count to exceed 230 million subscribers by 2024.

Twitter (TWTR) shares were up 8%. The social media platform launched a mobile app allowing users to share tweets directly to Snap’s (SNAP) photo messaging app Snapchat. Twitter is also looking to integrate tweets with other social media, including Facebook’s (FB) Instagram.

2. Industrials:

Equifax (EFX) shares were up 13% after the credit bureau raised its revenue and EPS guidance for the fourth quarter by 8% and 24%, respectively. Needham reiterated its Buy recommendation on Equifax and upped its share price target by $10 to $210.

Shares of Nielsen Holdings (NLSN) gained 6% after the audience tracking firm raised its 2021 free cash flow guidance by nearly 3%. Nielsen also unveiled a new tracking approach, Nielsen One, debuting in 2022. The new method will combine live TV and on-demand services ratings.

3. Energy:

Energy stocks rose, supported by Morgan Stanley’s bullish outlook for oil prices. The brokerage firm forecasted a $5 a barrel increase in the price of Brent by the second half of 2021to $55 a barrel. Morgan Stanley called oil & gas producers potential outsized beneficiaries of ‘reopening’.

Shares of oil & gas producers Occidental Petroleum (OXY) rose 12%, while those of Diamondback Energy (FANG) and Apache (APA) were up 6% each after the broker upped its share price targets.

Other Top 10 Winners

The S&P 500’s top 10 winners for the week included:

• Online marketplace Etsy (ETSY) +10%
• Drugmaker Eli Lilly (LLY) +8%
• Software & technology services provider Tyler Technologies (TYL) +7%

Top ETFs for the week

The following ETFs were among the biggest winners last week:

• Global X Uranium ETF (URA) +8%
• ARK Genomic Revolution ETF (ARKG) +7%
• ARK Innovation ETF (ARKK) +6%
• ALPS Medical Breakthroughs ETF (SBIO) +5%
• iShares MSCI Russia ETF (ERUS) +5%

Looking ahead to the week of December 14

The last working week before the Christmas holiday is a busy one. Events with market-moving potential include new pandemic relief, electoral college vote, Federal Reserve’s interest rate policy statement, and Brexit negotiations. Stock prices are likely to be most vulnerable to disappointment on new pandemic relief.

* Negotiations on the next pandemic relief package should continue in Congress. Neither the Republicans nor the Democrats appear willing to compromise on the stand on business liability protection and state & local government aid, respectively. Federal unemployment benefits and the eviction moratorium expire at the end of the month in case there is no agreement.

* The electoral college meets on Monday to vote for president and vice-president. Causing uncertainty, President Trump and his allies have refused to concede the 2020 election. Trump has said his efforts to challenge the election results are not over after the Supreme Court dismissed a lawsuit from Texas, seeking to throw out voting results from four swing states.

* The Federal Reserve holds its final interest rate policy meeting of 2020. There is some speculation among market participants that the Fed may shift the focus of its $80 billion monthly asset purchase to longer-dated notes and bonds to lower their yield.

* Other events that can move stock prices include the outcome of negotiations between Britain and the European Union on the post-Brexit trade deal and recommendations from the FDA expert panel after reviewing Moderna’s COVID-19 vaccine trial data.

* Electric car maker Tesla joins the S&P 500 on Friday. With nearly $600 billion in market capitalization, Tesla will likely be the seventh-largest S&P 500 member. The rebalancing can lead to volatility as index funds buy about $70 billion of Tesla shares and sell shares of other S&P 500 members.
 

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The United Kingdom became the first country to roll out the COVID-19 vaccine developed by Pfizer & BioNTech. Investors saw the weaker-than-expected November jobs data as positive for equities since it could compel Washington lawmakers to approve additional pandemic aid. All four U. S. stock benchmarks, including the S&P 500, closed the week at record highs.

Pfizer (PFE) and BioNTech (BNTX) became the first COVID-19 vaccine developers to get the green light for use in a Western country. The United Kingdom approved its vaccine for widespread use. The elderly in care homes and medical workers will get the vaccine first.

The Labor Department reported the economy added 245,000 non-farm jobs in November, lower than economists’ forecast of 469,000 jobs. Job creation in November was the slowest in six months. Slowing job growth raised investor’s expectations of Congress approving a new fiscal relief bill to help revive the coronavirus-hit economy.

Last week, a bipartisan group of senators unveiled a $900 billion stimulus package. The package includes $288 billion in small business funding for the Paycheck Protection Program and $160 billion in state & local government funding. It, however, excludes another round of $1,200 stimulus checks. Neither House Speaker Pelosi nor Senate Majority Leader McConnell appeared to be in favor of this package.

All four commonly followed U. S. stock indexes, namely, the Dow Jones Industrial Average, the S&P 500, the Nasdaq Composite Index, and the Russell 2000, closed the week at record highs. The four indexes closed at a record on the same day last on January 22, 2018.

For the week ending December 4, the S&P 500 (SPY) rose 1.7%.

Nine of the 11 sectors gained.
 

Leaders and laggards for the week ending December 04, 2020.

Energy (XLE), health care (XLV), and information technology (XLK) led the S&P 500.

Utilities (XLU), consumer discretionary (XLY), and materials (XLB) lagged the benchmark.

The number of advancing stocks in the S&P 500 exceeded the number of decliners by a 8-to-3 ratio.

The S&P 500’s top 10 winners included companies from the energy and information technology sectors. The energy sector accounted for four of the winners.

1. Energy:

The Organization of the Petroleum Exporting Countries & Russia overcame discord and agreed to a modest production increase of 500,000 barrels per day starting in January. OPEC & Russia also agreed to meet monthly in early 2021 to discuss the supply-demand balance.

Shares of oil refiner HollyFrontier (HFC) gained 15% to claim the top spot among the S&P 500 winners for the week. Energy services firm TechnipFMC(FTI), along with oil & gas producers Devon Energy (DVN) and Occidental Petroleum (OXY), rose double-digits to be the other top 10 winners.

The momentum in energy stocks continued from November. TechnipFMC, Devon Energy, and Occidental Petroleum were among the top five gainers of the S&P 500 in November. HollyFrontier announced plans to boost investments to expand its renewables portfolio.

2. Information Technology:

Shares of memory chip maker Micron Technology (MU) were up 14%. Micron upped its guidance for fiscal first-quarter sales, EPS, and gross margin, prompting several analysts to boost their share price targets. Memory chip production at Micron’s plant in Taiwan was impacted by a power shutdown last week. Investors believed this supply shortage would drive memory chip prices higher.

Shares of Micron’s competitor Western Digital (WDC) gained 13%, riding on Micron’s coattails.

NetApp (NTAP) was the third entry from the information technology sector in the top 10 list. Its shares rose 13%. The cloud data service and data management company beat analysts’ fiscal second-quarter EPS forecasts by 43%. NetApp’s revenues grew 3.3% year-over-year, topping analysts’ forecasts.

Other Top 10 Winners

The S&P 500’s top 10 winners for the week included:

• Casino operator Wynn Resorts (WYNN) +12%
• Regional bank Zions Bancorporation (ZION) +12%
• Life insurer Lincoln National (LNC) +11%

Top ETFs for the week

The following ETFs were among the biggest winners last week:

• ARK Genomic Revolution ETF (ARKG) +13%
• Global X Uranium ETF (URA) +11%
• Aberdeen Standard Physical Platinum Shares ETF (PPLT) +10%
• VanEck Vectors Oil Services ETF (OIH) +9%
• Alerian MLP ETF (AMLP) +9%

Looking ahead to the week of December 7

Stimulus talks, vaccine approvals, and bond yields are likely to be in the limelight this week. Unfavorable developments on any of these fronts can prompt investors to take profits. Following their big runup, small-cap stocks are, technically speaking, ‘overbought’ and could be more vulnerable.

* Stimulus discussions are likely to dominate markets this week after a bipartisan senator group pushed its $900 billion proposal last week. Congress also has to come up with a funding scheme by Friday to prevent the government from running out of money. Meanwhile, Senate Majority Leader McConnell remains opposed to large stimulus packages. Wall Street is looking for a stimulus package of at least $900 billion.

* A Food & Drug Administration advisory committee meets on December 10 to review Pfizer & BioNTech’s application for emergency use authorization of their COVID-19 vaccine. Investors will also be closely following the vaccine rollout in U. K. after Pfizer lowered its forecast for the number of doses it plans to ship in 2020 due to supply chain constraints.

* The yield on the 10-year Treasury bond closed at 0.97%, just shy of the 1% mark. This benchmark bond yielded over 1% last on March 19. The 10-year Treasury yield may well breach 1% this week if stimulus talks gain traction, maintaining hopes of economic recovery. Inflation data are due as well this week. Stock investors may not like to see a sharp increase in bond yields.
 

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The S&P 500 fell 0.8% last week as daily new COVID-19 infections set new records and many states implemented restrictions to curb the spread. Weekly unemployment claims and retail sales data disappointed. COVID-19 vaccine developers reported positive news.

The U. S. seven-day average of daily new Covid-19 infections rose nearly 20% last week to top 172,000, prompting measures to curb the spread. New York City closed its schools for in-person learning. California issued a ‘limited’ Stay-at-Home Order. The Centers for Disease Control and Prevention advised against traveling for Thanksgiving.

The labor market data showed the stress of rising COVID-19 cases and shutdowns. Initial unemployment claims for the week ending November 14 rose by 31,000 to 742,000. The Commerce Department reported a 0.3% gain in October retail sales below economists’ forecast for a 0.5% gain.

Interim late-state trial data showed Moderna’s (MRNA) COVID-19 developmental vaccine to be 94.5% effective in preventing infections. Pfizer (PFE) and BioNTech (BNTX) concluded their COVID-19 vaccine trial and applied for an emergency use authorization from the U. S. Food and Drug Administration. Some Americans could receive the vaccine by the end of the year if the U. S. FDA approves the vaccine in a few weeks as expected.

The push-and-pull between the rise of new COVID-19 cases versus progress on vaccines impacted investor sentiment throughout the week. Market leadership switched back-and-forth between economically-sensitive value stocks and pandemic-resistant growth stocks.

For the week ending November 20, the S&P 500 (SPY) fell 0.8%.

Five of the 11 sectors gained.

Leaders and laggards for the week ending November 20, 2020.

Energy (XLE), materials (XLB), and industrials (XLI) led the S&P 500.

Utilities (XLU), health care (XLV), and consumer staples (XLP) lagged the benchmark.

The number of advancing stocks in the S&P 500 surpassed the number of decliners by a 9-to-8 ratio.

The S&P 500’s top 10 winners included companies from the energy, consumer discretionary, and communication services sectors. Six of the winners were energy stocks.

1. Energy:

Energy stocks moved up as oil prices marked their third straight weekly gain. The rising possibility of COVID-19 vaccine rollouts eased oil demand concerns. Hopes of OPEC+ keeping production in check rose last week, supporting oil prices.

Diamondback Energy (FANG) was the week’s top performer in the S&P 500. The shale oil producer’s shares were up 19%.

Shares of Occidental Petroleum (OXY) rose 14% on group strength and analyst comments. Susquehanna raised its price target on the oil and natural gas producer shares to $18.

Energy service providers TechnipFMC plc (FTI) & Schlumberger (SLB), and oil producers Concho Resources (CXO) & ConocoPhillips (COP) were the other top 10 winners, each gaining 12-13%.

2. Consumer Discretionary:

A 55% jump in sales of personal hygiene products such as soap and hand sanitizer powered quarterly results at L Brands (LB). The owner of Bath & Body Works and Victoria’s Secret earned $1.17 a share, well above analysts’ $0.12 a share estimate. L Brands’ shares rose 16%.

Analyst upgrades helped shares of Under Armor (UAA) to a 12% gain. Argus upgraded the apparel manufacturer’s rating to Buy, citing improving earnings recovery prospects. Wells Fargo upgraded the stock to Overweight, anticipating activist investors to get involved.

Online marketplace operator Etsy (ETSY) was the third consumer discretionary name in the top 10 winner list; its shares were up 12%

3. Communication Services:

Entertainment giant ViacomCBS (VIAC) was the only entry from the Communication Services sector to feature among the top 10 winners with a 13% gain. The New York Times (NYT) reported several buyers, including News Corp. (NWSA) are interested in buying ViacomCBS’ book publishing unit, Simon & Schuster. With 19% of ViacomCBS float short, the rotation into value stocks forced short sellers to cover.

Top ETFs for the week

The following ETFs were among the biggest winners last week:

• Invesco WilderHill Clean Energy ETF (PBW) +12%
• Alerian MLP ETF (AMLP) +8%
• Global X MLP ETF (MLPA) +8%
• First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN) +7%
• ARK Next Generation Internet ETF (ARKW) +7%

Looking ahead to the week of November 23

Stocks are likely to extend their downtrend next week as investors try to balance the near-term economic impact from the rise in COVID-19 cases and shutdowns with the potential for a rebound next year. The trading week ahead is shortened by the Thanksgiving holiday on Thursday and by the 1:00 pm, Eastern close on Friday.

* Stocks are likely to be pulled down by the pandemic and pushed up by the promise of recovery this week. The impact of restrictions on the economy during the Thanksgiving holiday is likely to be a focal point. The negatives are likely to be offset by the optimism from vaccine data, approvals, and distribution efforts leading to economic recovery.

* The fiscal stimulus package is likely to return to the front-burner. Pandemic relief in the form of unemployment benefits and mortgage forbearance would end in December without a new stimulus package.

* Wall Street will look for leads into the Federal Reserve’s thinking on tweaking its $80 billion Treasury securities buying program when the central bank releases the minutes of its last interest rate policy meeting.

* The earnings calendar includes reports from medical device maker Medtronic (MDT), agriculture equipment maker Deere (DE), and electronics retailer Best Buy (BBY).

Note: The next Weekly Letter will be published on December 6.
 

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The S&P 500 rallied to close the week ending November 13 at a record high. Pfizer and BioNTech sparked the rally after trial data indicated their COVID-19 vaccine is more than 90% effective. Cyclical and value stocks included in the ‘reopening plays’ led the rally while large-cap tech stocks lagged. News outlets increased Biden’s lead over Trump in their electoral college vote estimates.

Stocks started last week with a bang after trial data from Pfizer & BioNTech indicated their COVID-19 vaccine is more than 90% effective. The Dow Jones Industrial Average was up over 1,600 points or 5.7% within a few minutes of trading on November 9 as stocks of ‘reopening plays’ surged and ‘stay-at-home plays’ lagged.

The continued rise in COVID-19 cases, however, restrained enthusiasm. On November 13, the nationwide daily new COVID-19 case count set a record of 183,000. The cumulative case tally exceeded 11 million, with both CA and TX topping 1 million. The state of New York and the city of Chicago imposed restrictions to curb the spread.

News outlets increased their estimates of Biden’s electoral college vote tally and continued to project Biden as the next President. Associated Press estimated Trump would have to overcome vote deficits of 60,000 in PA, 11,400 in AZ, and 14,100 in GA to reverse the election result.

For the week ending November 13, the S&P 500 (SPY) rose 2.3%.

Ten of the 11 sectors gained. Information technology was the sole loser.
 

Leaders and laggards for the week ending November 13, 2020.

Energy (XLE), financials (XLF), and industrials (XLI) led the S&P 500.

Information technology (XLK), consumer discretionary (XLY), and communication services (XLC) lagged the benchmark.

The number of advancing stocks in the S&P 500 outnumbered the number of decliners by a 4-to-1 ratio.

The S&P 500’s top 10 winners included companies from the real estate and energy sectors. Six of the winners were real estate investment trusts (REITs). Four were energy stocks.

1. Real Estate:

The shares of shopping center REITs posted massive gains since a COVID-19 vaccine can boost the prospects of mall and strip shopping center owners by allowing consumers to shop at retail outlets.

Shopping center REIT Kimco Realty (KIM) led the charge. Its shares surged 39% to be the week’s top performer in the S&P 500. Regency Centers (REG) and Federal Realty Investment Trust (FTR) rose 34% and 28% to claim the third and fifth spots.

Office REIT Vornado Realty (VNO), healthcare REIT Ventas (VTR), and hotel REIT Host Hotels & Resorts (HST) gained 27%, 26%, and 26%, respectively, to feature among the S&P 500’s top 10 winners.

2. Energy:

With the pandemic crushing petroleum demand, favorable COVID-19 vaccine trial data provided hopes of a revival in oil & gas consumption. The price of oil rallied nearly $3 a barrel or 8% last week.

The S&P 500’s top 10 winners included shares of selected companies across the petroleum value chain. They were shale oil producer Diamondback Energy (FANG) up 36%, oil refiners Valero Energy (VLO), and HollyFrontier (HFC) up 33% and 26%, respectively, and diversified manufacturing and logistics company Phillips 66 (PSX) up 26%.

Top ETFs for the week

The following ETFs were among the biggest winners last week:

• iShares MSCI Turkey ETF (TUR) +22%
• SPDR S&P Oil & Gas Exploration & Production ETF (XOP) +20%
• VanEck Vectors Oil Services ETF (OIH) +19%
• Energy Select Sector SPDR Fund (XLE) +17%
• Vanguard Energy Index Fund ETF (VDE) +17%

Looking ahead to the week of November 16

The tug-of-war between ‘reopening’ and ‘stay-at-home’ plays is likely to continue next week. ‘Stay-at-home’ plays can regain their leadership, particularly if COVID-19 cases continue rising. Reopening plays can get some relief if Moderna provides favorable data from its vaccine trials.

* Wall Street will continue to keep an eye on both election and COVID-19 related developments. Reopening and stay-at-home plays are likely to stay locked in their duel with odds favoring the latter as COVID-19 cases rise. Data from Moderna’s COVID-19 vaccine trials can move stock prices.

* The earnings reporting season shifts to retailers. Walmart (WMT), Home Depot (HD), and Lowe’s (LOW) are among the S&P 500 members that report next week. Semiconductor chipmaker NVIDIA (NVDA) and tax software provider Intuit (INTU) report as well.

* The economic data focus on the consumer. October retail sales and existing home sales are both in the spotlight. Economists expect a 0.6% gain in October retail sales from September and 6.5 million in existing home sales.
 

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The S&P 500 jumped 7.2%, its biggest weekly gain since April. The election remained unresolved through the market close on Friday. Early results indicated Democrat Biden becoming President and Congress remaining split. Job creation topped expectations in October. New daily COVID19 cases continued to rise.

Democrat Biden was declared the winner on Saturday, four days after the Presidential election.

Stocks surged last week, despite the lack of a winner in the presidential race through Friday. The trend in election results pointed to Democrat Biden becoming President, Democrats retaining control of the House, and Republicans controlling the Senate.

Investors believed the resulting gridlock in Congress would render repealing the 2017 corporate income tax cut or tightening financial regulations difficult. It would also keep fiscal stimulus relatively small and place most of the burden on the Federal Reserve to keep the economy churning via lower rates and asset purchases.

The Labor Department reported the U. S. economy added 638,000 jobs in October, topping economists’ forecast. The jobless rate dropped to 6.9% in October from 7.9% in September.

There was no let-up on the COVID19 front. The U. S. daily new case count set a new record of 132,000 on Friday, pushing the 7-day average above 100,000 for the first time.

For the week ending November 6, the S&P 500 (SPY) rose 7.2%.

All 11 sectors gained.

Leaders and laggards for the week ending November 6, 2020.

Information technology (XLK), health care (XLV), and materials (XLB) led the S&P 500.

Energy (XLE), utilities (XLU), and real estate (XLRE) lagged the benchmark.

The number of advancing stocks in the S&P 500 swamped the number of decliners by a 10-to-1 ratio.

The S&P 500’s top 10 winners included companies from the health care, information technology, and materials sectors. Five of the winners were information technology stocks.

1. Health care: Biogen (BIIB) and Cigna (CI)

Biogen (BIIB) shares rose 34% to be the week’s top performer in the S&P 500. Biogen shares surged on Wednesday on speculation of the U. S. Food and Drug Administration’s advisory committee recommending approval of Biogen’s Alzheimer’s treatment, aducanumab. The FDA advisory committee, however, failed to approve the drug after meeting on Friday. Biogen shares did not trade on Friday.

Cigna (CI) shares rose 21% on the back of group strength and strong earnings. Health insurer shares surged after the November 3 election on the belief Congressional gridlock limits the possibility of disruptive health care reforms. Cigna also raised its full-year revenue guidance due to the strength in its pharmacy benefits management business.

2. Information Technology: Arista Networks ANET), Gartner (IT), Zebra Technologies (ZBRA), Lam Research (LRCX), and Microchip Technology (MCHP)

Arista Networks (ANET) shares rose 24% after the cloud networking solutions provider raised its current-quarter revenue forecast to imply 11-15% year-over-year growth, breaking the string of year-over-year quarterly revenue declines. Arista also topped analysts’ quarterly sales and EPS forecasts in the reporting quarter.

Shares of Gartner (IT) were up 23% after beating analysts’ quarterly sales & EPS forecasts and raising full-year guidance. The IT consulting and services firm upped its 2020 guidance for sales and EPS to $4.05 billion and $4.07 a share, respectively, from $3.88 billion and $3.08 a share in August.

The other winners, Zebra Technologies (ZBRA), Lam Research (LRCX), and Microchip Technology (MCHP), were each up 19% or more.

3. Materials: Albemarle (ALB)

Shares of Albemarle (ALB) rose 20% after the lithium producer raised full-year 2020 EPS forecast to the $3.80-$4.15 range, well above analysts’ $3.48 forecast. Albemarle affirmed it does not expect its lithium rights in Chile to be impacted by the country’s new constitution.

Top ETFs for the week

The following ETFs were among the biggest winners last week:

• ETFMG Alternative Harvest ETF (MJ) +27%
• ETFMG Prime Junior Silver Miners ETF (SILJ) +16%
• iShares MSCI Poland ETF (EPOL) +16%
• Invesco DWA Technology Momentum ETF (PTF) +16%
• Invesco WilderHill Clean Energy ETF (PBW) +16%

Looking ahead to the week of November 9

Stocks may well pull-back this week after last week’s surge as reality sinks in on the election, stimulus, and COVID19. The decline can, however, prove to a good buying opportunity ahead of a seasonally strong December.

* Investors will be watching election developments closely, even if the Presidential election is complete. First, recounts are likely from narrow victory margins and lawsuits. Second, the control of the Senate is unknown. The composition of the Senate may remain an open item until Georgia holds the two runoff elections on January 5, 2021. Stocks are likely to lose at least part of their last week’s gains if the odds of Congressional gridlock diminish.

* Stimulus discussions are likely to become a focal point for investors when the Senate reopens for legislative business on November 9. Senate Republicans support a targeted aid package to the tune of $500 billion. House Democrats have approved a new $2.2 trillion coronavirus aid package. Investors will look if the two parties can bridge contentious issues such as state & local government aid and enhanced unemployment insurance.

* Wall Street will also keep an eye on the record-setting surge in coronavirus cases. Economists are concerned that the economic recovery could suffer if some states restrict activities and consumers pull back during the holiday season.

* The third-quarter earnings reporting season starts to wind down with about 20 S&P 500 companies scheduled to report. Reporting names include Air Products (APD), Applied Materials (AMAT), Cisco (CSCO), Disney (DIS), and McDonald’s (MCD).
 

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The S&P 500 lost 5.6%, its biggest weekly decline since March. Investors worried about the possibility of prolonged uncertainty from a contested presidential election. A record-setting increase in daily new COVID19 cases triggered concerns of a return to lockdowns. Positive surprises in U. S. third-quarter gross domestic product growth and third-quarter earnings reports fell by the wayside.

Nervousness over the outcome of the November 3 presidential elections weighed on stocks as investors worried about the implications of a contested election that could drag on for weeks.

The daily number of new COVID19 cases set records last week. The count topped 100,000 for the first time on Friday. The state of Illinois ordered Chicago to shut down indoor dining.

In economic data, the Commerce Department estimated U. S. gross domestic product expanded at a 33.1% annualized rate in the third quarter, its fastest growth ever. The GDP expansion rate topped economists’ forecast.

In earnings news, large-cap information technology and communication services companies like Apple (AAPL), Amazon (AMZN), and Microsoft (MSFT) reported positive EPS surprises. Yet, their shares came under selling pressure. The Technology Sector SPDR (XLK) and the Consumer Discretionary Sector SPDR (XLY) lost 6.4% and 6.6%, respectively.

For the week ending October 30, the S&P 500 (SPY) fell 5.6%.

All 11 sectors declined.

Leaders and laggards for the week ending October 30, 2020.

Utilities (XLU), real estate (XLRE), and materials (XLB) held up better than the S&P 500.

Consumer Discretionary (XLY), industrials (XLI), and information technology (XLK) lost more than the index.

The number of declining stocks in the S&P 500 swamped the number of advancers by an 18-to-1 ratio.

The S&P 500’s top 10 winners included companies from the real estate, consumer discretionary, and information technology sectors.

1. Real Estate: CBRE Group (CBRE)

CBRE Group (CBRE) shares rose 8% to be the week’s top performer in the S&P 500. The commercial real estate services & investment leader made positive comments on its business trends after beating analysts’ third-quarter revenue and EPS estimates. The company also announced it is relocating its headquarters to Dallas from Los Angeles.

2. Consumer Discretionary: Tiffany (TIF) and Tapestry (TPR)

France’s LVHM Moet Hennessy (LVMUY) and Tiffany (TIF) ended their 1-year old takeover saga started by the pandemic. LVMH finally agreed to buy Tiffany for $15.8 billion or $131.50 a share, about $425 million less than the price agreed last November before the pandemic. Tiffany shares were up 6%.

Shares of another luxury goods-maker Tapestry (TPR) rose 4% to fare among the S&P 500’s top 10 winners. The parent of Coach and Kate Spade brands beat analysts’ fiscal first-quarter revenue and EPS estimates after e-commerce sales surged triple digits.

3. Information Technology: Automatic Data Processing (ADP) and F5 Networks (FFIV)

Shares of Automatic Data Processing (ADP) rose 6% after the payroll processor raised its revenue and EPS forecasts after beating analysts’ fiscal first-quarter revenue and EPS estimates.

Application security and delivery company F5 Networks (FFIV) cited healthy customer interest in its solutions like the BIG-IP app delivery services and the Nginx platform after topping analysts’ fiscal fourth-quarter revenue and EPS estimates. F5 shares rose by 4%.

Other top 10 winners in the S&P 500

The following stocks rose 3-5% each to round out the top 10 list:

• Cloud-connected medical devices maker ResMed (RMD)
• Healthcare research equipment maker PerkinElmer (PKI)
• Gold miner Newmont (NEM)
• Energy services provider Baker Hughes (BKR) and
• GPS navigation and wearable specialist Garmin (GRMN)

Looking ahead to the week of November 2

Stocks stand to rebound from their recent decline if the presidential election result is decisive. The resumption of stimulus talks can also help to improve investor sentiment.

* The nation goes to the polls to elect the next President on November 3. Investors are hoping for a clear outcome in this close presidential election. While Democrats are likely to retain control of the House of Representatives, the result for the Senate race is less clear.

* On the economic calendar, the spotlight is on the October employment report due on Friday. Economists expect nonfarm payrolls to increase by about 570,000, less than the 661,000 jobs added in September. Wall Street expects the Federal Open Market Committee’s interest-rate policy meeting to be an ordinary affair this week, with monetary policy staying unchanged.

* The third-quarter earnings reporting season continues with more than 100 S&P 500 companies scheduled to report. Reporting names include CVS Health (CVS), Duke Energy (DUK), PayPal (PYPL), Qualcomm (QCOM), and T-Mobile (TMUS).
 

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The gap between the stimulus proposals made by Democrats & Republicans continues to be substantial, diminishing the odds of further pandemic relief before the November 3 election. Nearly 84% of S&P 500 companies reporting third-quarter earnings topped analysts’ forecast. The U. S. FDA approved remdesivir for patients hospitalized with COVID19.

The odds of a new stimulus bill passing before the election declined further last week. The gap between the stimulus proposals supported by Democrats and Republicans continues to remain over a trillion dollars.

The White House and House Speaker Nancy Pelosi have put the onus on the other party to compromise for a deal. Senate Majority Leader McConnell has now changed his stance and refused to commit to a pre-election vote on an aid package, saying he worries about dividing Republicans days before the election.

In third-quarter earnings reports, 84% of reporting S&P 500 companies topped analysts’ forecast. While companies are, on average, exceeding analysts’ EPS forecast by 17%, aggregate 2020 third-quarter earnings are likely to be down 16.5% year-over-year.

The seven-day average of daily new COVID19 cases in the U. S. rose last week to 64,000 from 56,000 the week before. The U. S. Food and Drug Administration approved Gilead Sciences’ (GILD) Veklury (remdesivir) for hospitalized patients.

For the week ending October 23, the S&P 500 (SPY) fell 0.4%.

Five of the 11 sectors gained.

Leaders and laggards for the week ending October 23, 2020.

Communication services (XLC), utilities (XLU), and financials (XLF) led the S&P 500.

Information technology (XLK), real estate (XLRE), and consumer staples (XLP) lagged the index.

The number of advancing stocks in the S&P 500 almost equaled the number of decliners.

The S&P 500’s top 10 winners included companies from the healthcare, consumer discretionary, and financial sectors.

1. Healthcare: Align Technology (ALGN)

Align Technology (ALGN) shares surged a whopping 40% to be the week’s top performer in the S&P 500. The orthodontic-device maker reported third-quarter sales and EPS exceeding analysts’ forecast by 43% and 317%, respectively. Sales rose from strong demand for Invisalign clear aligners from teenagers.

2. Consumer Discretionary: Under Armor (UAA) and Las Vegas Sands (LVS)

Under Armor (UAA) shares were up 13%. Analysts at Deutsche Bank and Raymond James raised their price targets for the apparel & footwear maker’s shares.

Shares of Las Vegas Sands (LVS) jumped 12% after the casino operator reported a smaller-than-expected loss on higher than expected sales. Analysts at Jefferies and JP Morgan upped their share-price targets on the expectation, results from the company’s Macau and Singapore properties should improve.

3. Financials: Comerica (CMA) and Travelers (TRV)

Shares of Comerica (CMA) rose 11% after the regional bank reported third-quarter EPS of $1.44 on $710 million revenue, beating analysts’ forecast by 73% and 2%, respectively.

Travelers (TRV) shares were up 11% after the property & casualty insurer earned $3.12 per share in the third quarter, above analysts’ $3.07 estimate on a 2.7% year-over-year increase in sales.

Other top 10 winners in the S&P 500

COVID19 reopening plays in the consumer discretionary sector, Norwegian Cruise (NCLH), Expedia (EXPE), and Gap (GPS) were up over 11% each.

Top ETFs for the week

The following ETFs were among the biggest winners last week:

• Global X Social Media ETF (SOCL) +8%
• SPDR S&P Regional Banking ETF (KRE) +8%
• U. S. Global Jets ETF (JETS) +7%
• Global X Copper Miners ETF (COPX) +6%
• VanEck Vectors Oil Services ETF (OIH) +5%

Looking ahead to the week of October 26

With a new stimulus bill unlikely before November 3, stocks may extend their downtrend in the coming week, particularly if the odds of a contested election increase and new COVID-19 cases continue rising.

* This is last week before the nation goes to the polls on November 3. Although Biden’s lead in national polls has shrunk in recent weeks, his widening advantage in battleground states has boosted Wall Street’s confidence in a clear winner emerging after the election. This confidence is likely to erode and lead to volatility in stock prices if Biden’s lead in battleground states shrinks.

* Nearly 170 of the S&P 500 companies report earnings. Investors will get a read on the information technology sector from Apple (AAPL), Facebook (FB), and Google parent Alphabet (GOOG). Amazon.com (AMZN), Boeing (BA), Caterpillar (CAT), Merck (MRK), and Pfizer (PFE) are also among the companies reporting this week.

* Investors will get a first look at third-quarter U. S. gross domestic product when the Commerce Department puts out its preliminary estimate on Thursday. Economists expect U. S. GDP to rebound at an annualized rate of 32% in the third quarter after contracting by nearly the same magnitude in the second due to COVID19.
 

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Nearly 86% of S&P 500 companies reporting third-quarter earnings topped analysts’ forecast. Two COVID19 vaccine trials were halted due to safety concerns, while COVID19 cases continued to rise in the U. S. and Europe. Washington lawmakers held on to their entrenched positions, thwarting any movement towards a new stimulus bill.

The third-quarter earnings reporting season kicked off last week. Nearly 86% of the S&P 500 companies reporting earnings topped analysts’ EPS forecast according to FactSet. Although companies are, on average, exceeding analysts’ EPS forecast by 22%, aggregate 2020 third-quarter- earnings are likely to be down 18.4% year-over-year.

The 3-day average of daily new COVID19 cases in the U. S. rose above 65,000 after a gap of nearly 10 weeks. Rising COVID19 case counts in Europe prompted France, Germany, and the U. K. to reinstate strict social distancing rules.

Johnson & Johnson (JNJ) and Eli Lilly (LLY) paused trials of their COVID19 vaccine candidates due to safety concerns. Pfizer (PFE) sounded more reassuring, saying it may submit its vaccine for emergency use authorization by late November.

Lawmakers in Washington made little progress toward a stimulus deal. Senate Republicans, including Majority Leader McConnell, remained opposed to trillion-dollar packages. Democrats, including House Speaker Pelosi, maintained their opposition to a smaller package since the House of Representatives has already passed a $2.2 trillion package. Last week, President Trump tried to push Republicans for a bigger stimulus bill with no effect.

For the week ending October 16, the S&P 500 (SPY) rose 0.1%.

Five of the 11 sectors gained.

Leaders and laggards for the week ending October 16, 2020.

Industrials (XLI), utilities (XLU), and information technology (XLK) led the S&P 500.

Real estate (XLRE), energy (XLE), and financials (XLF) lagged the index.

The number of advancing stocks in the S&P 500 almost equaled the number of decliners.

The S&P 500’s top 10 winners included companies from the information technology, materials, and energy sectors.

1. Information Technology: Autodesk (ADSK)

Autodesk (ADSK) shares rose 9% to be the week’s top performer in the S&P 500. The Motley Fool recommended shares of the engineering & construction software provider, saying Autodesk’s sales and profits are accelerating from the launch of its new Fusion 360 product and its transition to selling software-as-a-service.

2. Materials: International Paper (IP) and WestRock (WRK)

Shares of International Paper (IP) and WestRock (WRK) rose 9% and 8%, respectively, after BMO Capital rated them Outperform on improving outlook for product pricing and demand growth. BMO Capital raised its price target for International Paper and WestRock shares to $53 and $57, respectively.

3. Energy: Concho Resources (CXO)

Shares of shale oil producer Concho Resources (CXO) rose 8% after Bloomberg reported ConocoPhillips (COP) is in talks to acquire the former. Concho Resources has an equity market capitalization of $10 billion. This deal, if completed, would follow Chevron’s purchase of shale oil producer Noble Energy (NBL) for $4 billion.

Other top 10 winners in the S&P 500

Stocks of several financial firms made healthy gains on a combination of better-than-expected earnings and consolidation possibilities. Shares of Blackrock (BLK), Invesco Ltd. (IVZ), and Morgan Stanley (MS) rose 6-7% each to be among the S&P 500’s top 10 winners last week.

Top ETFs for the week

The following ETFs were among the biggest winners last week, each up about 2%:

• ProShares Pet Care ETF (PAWZ)
• SPDR S&P Capital Markets ETF (KCE)
• Amplify Online Retail ETF (IBUY)
• First Trust Water ETF (FIW)
• Global X Cloud Computing ETF (CLOU)

Looking ahead to the week of October 19

Stocks may have trouble extending their three-week winning streak without positive surprises on the stimulus or the COVID19 vaccine fronts.

* Investors will keep their focus on Washington during the week ahead as lawmakers continue to wrangle over a new U. S. fiscal stimulus bill. The Senate will likely vote on a skinny $500 million package, including a Paycheck Protection Program. While the implementation of even such a limited stimulus package would be a welcome development, such an outcome is unlikely.

* Nearly 80 of the S&P 500 companies report earnings. Reporting companies include communications services leaders Verizon (VZ) & Netflix (NFLX) and consumer staples titans Procter & Gamble (PG) & Coca-Cola (KO). Intel (INTC), Abbott Laboratories (ABT), Union Pacific (UNP), and NextEra Energy (NEE) are among the others set to report.

* The housing industry is among the better performing parts of the economy, thanks to near-zero interest rates. Investors will seek confirmation when home builders’ sentiment, housing starts, and home sales data come out.
 

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Stocks rallied on hopes of additional pandemic relief even though the path to a new stimulus bill remained unclear. Investors appeared to take comfort in a stimulus bill coming through regardless of its timing. Democratic candidate Biden increased his lead over President Trump, arguably raising the odds of a result shortly after the November 3 election.

Stocks rallied on hopes of more stimulus last week despite differences between Congress and the Trump administration. The confusion from President Trump calling off negotiations, restarting them, and pushing skinny as well as comprehensive deals did not dissuade investors.

The path to a new stimulus bill remained unclear. Senate Republicans, including Majority Leader McConnell, remained steadfast in opposing a $1+ trillion package.

Investors appeared to take comfort with the notion that a stimulus package will be implemented by the Biden administration after the election, even if one does not pass before the poll.

Several national polls showed Democratic candidate Biden having established a clear lead over Trump, potentially lowering the odds of a contested election.

For the week ending October 9, the S&P 500 (SPY) rose 3.9%.

All 11 sectors gained.

Leaders and laggards for the week ending October 09, 2020.

Materials (XLB), energy (XLE), and utilities (XLU) led the S&P 500.

Real estate (XLRE), communication services (XLY), and consumer staples (XLP) lagged the index.

Breadth was strongly positive, with the number of advancing stocks in the S&P 500 beating decliners by an 11-to-1 ratio.

The S&P 500’s top 10 winners included companies from the information technology, consumer discretionary, and materials sectors.

1. Information Technology: Xilinx (XLNX) and Arista Networks (ANET)

Xilinx (XLNX) shares rose 18% to be the week’s top performer. The Wall Street Journal reported competitor Advanced Micro Devices (AMD) is in advanced negotiations to acquire Xilinx for as much as $30 billion.

Shares of Arista Networks (ANET) were up 12%. Citing higher demand for networking-equipment from cloud computing enablers in 2021, JP Morgan raised its Arista share price target by 8% to $275 from $255, implying a 25% upside.

2. Consumer Discretionary: Tapestry, Inc. (TPR)

Shares of the luxury goods retailer Tapestry (TPR) were up 17% after Deutsche Bank reiterated its Buy rating and $21 share price target. The analyst expects Tapestry to benefit from consumers reallocating travel & entertainment dollars towards the latest fashions during the pandemic after competitors Capri Holdings (CPRI) and Levi Strauss (LEVI) commented on this trend.

3. Materials: Corteva (CTVA) and Martin Marietta Materials (MLM)

Corteva (CTVA) shares were up 14% after activist investor and shareholder Starboard Value pitched the opportunities available for the agriculture company to cut costs and lower its profit margin gap versus competitors.

Shares of Martin Marietta Materials (MLM) were up 14% after Deutsche Bank upgraded the building materials producer to Buy from Hold and lifted its share price target by 35% to $311.

Top ETFs for the week

Cannabis ETFs were the top performers last week. Democratic vice presidential nominee Harris said the Biden administration would decriminalize the use of marijuana in the U. S.

Renewable energy ETFs gains were in favor for the second straight week as Democratic presidential nominee Biden increased his lead over President Trump.

The following cannabis ETFs and renewable energy ETFs were among the last week’s biggest winners:

• The Cannabis ETF (THCX) +19%
• Global X Cannabis (POTX) +17%
• Invesco Solar (TAN) +14%
• Invesco WilderHill Clean Energy (PBW) +13%
• iShares Global Clean Energy (ICLN) +12%

Looking ahead to the week of October 12

The stock market has a five-day week ahead, while the bond market is closed on Monday in observance of Columbus Day.

* The third-quarter earnings reporting season kicks off next week. Nearly 30 of the S&P 500 companies are due to report. The list has 16 companies from the financial sector, including JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), and BlackRock (BK). Healthcare heavyweights Johnson & Johnson (JNJ) and UnitedHealth Group (UNH) are among the reporting companies as well.

* Washington continues to send mixed signals about a pandemic relief package. Assistance for the troubled airline industry is at stake. It remains to be seen if politicians can set aside their differences and assist at least the neediest constituents before the election.

* The economic calendar includes readings on retail sales and inflation in addition to weekly unemployment claims. Economists expect retail sales to increase by 0.6% in September, matching August’s tally. Inflation measures at the consumer and producer level are due as well.
 

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President Trump tested positive for the coronavirus. Investors latched on to the idea that Trump’s health concerns and the weaker-than-expected jobs report would lead to the implementation of fiscal stimulus measures relatively soon. This additional pandemic relief package, in turn, would provide renewed impetus to the flagging economic recovery.

Concerns of the impact of the COVID19 pandemic on the election and economy increased after President Trump tested positive for the coronavirus. An increase in New York city’s daily positive rate of coronavirus tests also added to worries.

The economic recovery showed signs of weakening. The Labor Department said the U. S. economy created 661,000 in nonfarm jobs in September, less than the 800,000 economists’ forecast.

Investors perceived Trump’s health concerns and the weaker-than-expected jobs report to up the odds of the additional fiscal stimulus soon. To this effect, Democrats and Republicans put forth pandemic relief packages for $2.2 trillion and $1.6 trillion, respectively, suggesting a narrowing in the gap between the two proposals.

For the week ending October 2, the S&P 500 (SPY) rose 1.6%, its first weekly gain after five straight losses.

Ten of the 11 sectors gained. Energy (XLE) was the only sector to lose ground.

Leaders and laggards for the week ending October 02, 2020.

Real estate (XLRE), financials (XLF), and utilities (XLU) led the S&P 500.

Energy (XLE), information technology (XLK), and communication services (XLY) lagged the index.

Breadth was strongly positive, with the number of advancing stocks in the S&P 500 beating decliners by an 11-to-3 ratio.

The rally favored small-caps with the S&P 500’s top 10 winners having a median market capitalization of just $18 billion.

The S&P 500’s top 10 winners included companies from the information technology, consumer discretionary, and financial sectors.

1. Information Technology: Paycom (PAYC) and DXC Technology (DXC)

Paycom (PAYC) shares rose 17% to be the week’s top performer. Stifel raised its rating on shares of the human capital management software provider to Buy. The new $365 share-price target implied a 14% upside.

Shares of DXC Technology (DXC) were up 13% after the IT service provider announced it would use the $5 billion in proceeds from the sale of its state & local health services business to strengthen its balance sheet.

2. Consumer Discretionary: Gap, Inc. (GPS)

Up 13%, Gap (GPS) shares were the second-highest gainer in the S&P 500. To better meet online shopping demand, the apparel retailer plans to hire 10,000 workers for its fulfillment and customer-contact locations this holiday season.

3. Financial: Truist Financial (TFC) and Invesco Ltd. (IVZ)

Truist Financial (TFC) shares rose 11% after Barron’s featured the bank as its stock pick. The publication stated synergies from the SunTrust-BB&T bank merger should help Truist do well.

Invesco (IVZ) shares were up 10%. Activist hedge fund Trian unveiled a 9.9% stake in both Invesco and Janus Henderson (JHG), intending to create an asset management giant.

Top ETFs for the week

Renewable energy ETFs were in favor as Democratic candidate Biden’s chances in the Presidential election appeared to improve. The following renewable energy ETFs were up 10% or more:

• Invesco Solar (TAN)
• iShares Global Clean Energy (ICLN)
• First Trust NASDAQ Clean Edge Green Energy (QCLN)
• Invesco WilderHill Clean Energy (PBW)
• SPDR Kensho Clean Power (CNRG)

Looking ahead to the week of October 5

All attention is on happenings in Washington this week.

* Wall Street has a new concern to contend with in President Trump’s health. Investors and analysts will watch how the president communicates with the public and look forward to health updates from the White House medical staff. Investors are also likely to pay more attention to COVID19 statistics than before.

* The new pandemic relief package is another top-of-the-mind item for the market. Democrats and Republicans have narrowed the gap in their stimulus proposals. They now have another opportunity to middle ground and get the job done.

* Federal Reserve Chairman Powell has one more opportunity to push Congress and the Administration in approving the new pandemic relief package. Powell is scheduled to deliver a speech to the National Association of Business Economists.

* Earnings calendar is light with just four S&P 500 members scheduled to report earnings. They are Delta Air Lines (DAL), Domino’s Pizza (DPZ), Lamb Weston Holdings (LW), and Paychex (PAYX).
 

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