Fundamentum - Weekly Snapshot: Week Ending 9/25/20

Fundamentum - Weekly Snapshot: Week Ending 9/25/20

September 28, 2020

Market Review: Week Ending 9/25/2020

US stocks declined for the 4th consecutive week, as the S&P 500 Index fell 0.6% to a 7-week low of 3298.1 What began as a healthy pullback in the extended (and expensive) technology leaders has gained downside momentum as new Covid-19 cases have accelerated in the US and Europe, and as investor optimism around additional fiscal stimulus has waned. Without additional stimulus, investors have begun to question the pace of the economic recovery with over 12m Americans still unemployed1 and with the rising number of infections,1 both occurring just before the final leg of the election campaign which is sure to bring additional uncertainty. Stay-at-home technology leaders recaptured investor interest again last week after their September declines as concerns over the virus grew. Growth leaders and Covid-19 beneficiaries Zoom, Amazon, Apple, Microsoft, PayPal, and eBay all rallied last week, while “recovery sectors” Energy, Financials, and Industrials sectors each declined 2-5%.1 There were also new signs of stress in credit markets as outflows from high-yield funds and ETFs surged to $5B, the largest outflow since March, sending credit spreads higher after a long period where spreads had compressed.1 Reports of delinquencies in the subprime auto and residential mortgage markets also emerged, and bank lending standards are said to have become stricter as banks attempt to minimize exposure to problem loans. Housing continues to be the bright spot in the economy. Existing Home Sales were reported last week to have risen 10.6% y/y in August, and the median house price rose 11.6% to over $315k.1 Inventory has fallen to a record-low 3 months of sales.1 Through the close Friday, year to date results for the major indices are as follows: S&P 500 3.5%, Russell 2000 -10.7%, MSCI EAFE –8.5% and Bloomberg Barclays Aggregate Bond 6.8%.2

Want to know what we're watching in the week ahead? Check out the FULL REPORT in the attachment section below.

Chad Roope, CFA®
Paul Danes, CFA®


1-Morningstar Direct 9/28/20
2-Factset 9/28/20