E-mini S&P 500 Futures (December): Settled at 3339.25, down 28.50 on Friday and up 52 on the week
E-mini Nasdaq-100 Futures (December): Settled at 11,233.25, down 341.50 on Friday and up 96.75 on the week
U.S. benchmarks are digging out of Friday’s weakness.
In a tale of 3 indexes, the S&P 500 has recouped the losses from Thursday’s settlement and President Trump’s midnight announcement of contracting Covid-19. The Russell 2000 is at the highest level since mid-September and the Nasdaq-100 remains about 2% below Thursday’s surge.
The tech behemoths all finished poorly on Friday; Apple -3.23%, Amazon -2.99%, Microsoft -2.95%, Facebook -2.51% and Alphabet -2.17%. Overall, the Nasdaq-100 lost 3% on Friday; semiconductors and software were also all sharply lower. Healthcare lost -0.91%. However, the sectors that have underperformed all year, banks, energies, industrials, and utilities, all had strong sessions. In fact, since the start of the fourth quarter on Thursday, the Russell 2000 small caps index is up 3.12%. Since the historic tech rally from the pandemic March low, many have called for a sector rotation only to find such dissipate as quick as its starts. With a new quarter upon us and potential rebalancing in the mix, we don’t believe this either to be the onset of a regime shift. However, we do expect a continued choppy trade as we head into the election, now less than a month away.
The firm start to the week is attributed to an upbeat prognosis of President Trump. Regardless of your political affiliation or personal feelings of the President, he is still the leader of this country. Markets hate uncertainty and if he is incapacitated due to Covid-19, it only increases uncertainty; on Friday, markets acted accordingly. Traders must keep a pulse on the developments of the President and his staff with the election nearing. Additionally, to the potential of new restrictions due to outbreaks across the country and globally.
Nonfarm Payrolls on Friday certainly weren’t bad. Was it clearly better than lofty expectations? No. One cannot ignore steady job growth in September and an upward revision for August. Manufacturing jobs were added at a pace nearly double expectations, the unemployment rate fell to a pandemic low 7.9%. Although Average Hourly Earnings growth was a tenth below MoM and YoY expectations, the annualized read increased in September for the third month in a row and has steadily risen to well above pre-pandemic levels.
On today’s economic calendar, final September Services data in Europe improved slightly from a big miss. We look to final September Services PMI from the U.S. at 8:45 a.m. CT and the more closely watched ISM Nonmanufacturing read at 9:00 a.m. CT. Richmond Fed President Thomas Barkin speaks at 9:00 a.m. CT, Chicago Fed President Charles Evans follows at 9:45 a.m. CT and Atlanta Fed President Raphael Bostic is at 2:15 p.m. CT. All of them are 2021 voters.
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