October 15, 2020
Volatility hit the U.S. equity markets yesterday with all three major indices posting losses on the day. The Dow and S&P 500 dropped 165.81 and 23.26 points, or -0.58% and -0.66%, respectively. The NASDAQ lost 95.17 points, or -0.80%.
The sour news continues today, beginning with a worse-then-expected jobless claims report. Last week, 898,000 Americans filed for first time unemployment benefits, an increase of 53,000 from the week before. While the number comes in below the critical 1 million jobless claims level, economists worry the unemployment remains stubbornly in the high 800,000s. As COVID-related lockdowns continue, unemployment will have an uphill task of improving.
The wrangling in Washington over a COVID relief bill continues with comments that a bill will not be passed before the election. Recent reports show that while both sides have agreed to the first $1.8 trillion of “pure” economic relief, House Speaker Nancy Pelosi is holding out for an additional $400 billion to rebuild cities rooted and burned during the riots last summer. It is looking to be an all-or-nothing deal for the Democrats passing any COVID relief bill.
The uncertainty surrounding the aid talks led to the market’s second straight daily decline yesterday. “Market volatility is set to continue in the weeks ahead as investors brace for a host of uncertainties – the timing of vaccine availability (after a setback for Johnson and Johnson), the size and timing of additional U.S. fiscal stimulus, and the election outcome,” wrote Mark Haefele, chief investment officer of global wealth management at UBS. “The uneven recovery in the U.S. economy also adds to investor concerns as the results season kicked off this week.”