Before The Bell
Well before the opening bell this morning and hours ahead of the release of the all-important monthly report from the U.S. Labor Department on employment and unemployment (more below), came the announcement that the President had tested positive for COVID-19. This news followed on the heels of a report that a close aide of the President also had tested positive for the disease and that she was showing symptoms of the illness. The equity futures, as would be expected, fell on this development signaling a likely weak opening on Wall Street when trading commences at 9:30 AM (EDT). Meanwhile,
September has come to a merciful end, and, as is often the case with this final month of the summer, it was a difficult 30 days. On point, the month saw the Dow Jones Industrial Average, the S&P 500 Index, and the tech-heavy NASDAQ all give ground. Essentially, the reasons for the setback were concerns about rising rates of COVID-19 infections, the election, equity valuations, and the economy, where the past few minutes has brought critical news on the jobs front.
Nevertheless, it was a very good third quarter, overall, as stellar gains during July and August more than compensated for the September decline. Year to date, the Dow and the small-cap Russell 2000 are off by 2.7% and 9.6%, respectively, while the S&P 500 Index and the NASDAQ are ahead by 4.1% and 24.5%. The outsized increases in the NASDAQ reflect sizable gains this year in several technology stalwarts, such as Apple (AAPL), Amazon (AMZN), and NVIDIA Corp. (NVDA).
As for yesterday's market, the first full day of October started on an up note, with improvement driven by continuing hopes that Congress will be able to fashion a new stimulus package, an agreement that Federal Reserve Chair Jerome Powell has strongly suggested was needed to ensure that the very tenuous economic recovery can be sustained. The hoped-for progress of the talks has been a factor in helping the market push higher so far this week.
Meanwhile, after that early strength helped to send the Dow up by 260 points in the first few minutes of trading, indications that the talks in Congress were not going all that well sent the market back down, with the Dow nudging into the red for a brief spell in mid-morning. Then, after a modest rally ensued for several hours, the blue chips fell back to a more substantial, but still mild, deficit as we hit the final two hours of the session. In the end, stocks would finish modestly higher on the day.
As for other items, Wall Street, which also has been eagerly awaiting the data on non-farm payrolls and the jobless rate from the Labor Department, also received news on the jobs front yesterday when the government reported that weekly jobless filings had dipped slightly over the past seven days, to 837,000 individuals. Also of note yesterday, surveys issued showed that personal income had fallen in August, but that consumer spending had risen.
Finally, we have just had the employment report released. Normally, this would be the headline event on the day. However, with the news of the President testing positive for the coronavirus, this issuance will take a secondary role for now. Nevertheless, the jobs survey did indicate that the nation had added 661,000 positions in September, thereby continuing the recovery in employment that has been under way since the spring, but at a disappointing pace. That increase was less than half the 1,489,000 rise in August. In other aspects of the report, the unemployment rate fell to 7.9% and the labor force participation rate dipped from 61.7% to 61.4%. All in all, this was a worrisome report and save for the news on the President would likely have been poorly received by investors.
As for the stock market, there is now a sense of greater uncertainty, with the next few days providing a steady stream of news on the President's condition and health outlook. The ebb and flow of such reports could well raise the already high level of volatility on the Street. Stay tuned.
– Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in AAPL.
