Market Update November 6, 2020

Chris Giordano |

Market Update

Presented by Chris Giordano, November 6, 2020

US markets pullback amid uncertainty. As ballots are still being tallied, equities opened little changed this morning. Investors appear to be in approval of a likely divided Congress outcome, offsetting concerns about a possible drawn-out battle for the White House and COVID-19 spread.

  • The S&P 500 Index pared losses on the strong jobs report to open little changed.
  • The NASDAQ is lagging slightly.
  • European markets are mostly lower through midday trading.
  • Asian markets closed mostly higher.

Fed policy remains supportive. In an unremarkable policy meeting, the Federal Reserve (Fed) kept its policy rate at 0–0.25% and maintained its current rate of bond purchases. In his post-meeting press conference, Fed Chair Jerome Powell emphasized that the Fed has not exhausted its policy tools and highlighted the importance of Congress passing additional fiscal policy measures to complement the Fed’s monetary stance.

Job growth continues. The US economy added 638,000 jobs in October according to the US Bureau of Labor Statistics, ahead of Bloomberg survey estimates of 580,000. The unemployment rate also declined, falling an entire percent, from 7.9% to 6.9%. We take a closer look at the state of the US labor market in today’s LPL Research blog.

Putting the past 4 days in perspective. It’s been the best two-day rally after an election and best start to the month of November ever, with the S&P 500 up 7.4% in just four days. Even more impressive is that the S&P 500 has been up 1% or more four days in a row. The last time that happened was in October 1982. Blasts of strength like this can lead to potential future gains and shouldn’t be ignored.

Read Ryan Detrick’s tweet!

Election 2020 update. No clear winner in the presidential race has been declared as vote counting enters its fourth day. Arizona, Georgia, Nevada, and Pennsylvania remain the focus. Former Vice President Joe Biden took an extremely narrow lead in Georgia Thursday night—a state that previously leaned toward President Trump. With mail-in votes continuing to be counted, there’s a growing possibility that we won’t have a clear winner until after the weekend (source: US Election Project).

Technical update. Thursday stocks rallied for the fourth consecutive day and for the second day after the election. While the S&P 500’s headline gain of 1.9% lagged Wednesday’s 2.2% gain, internals were significantly better as advancers on the New York Stock Exchange outnumbered decliners by more than 5:1. The index closed just over 2% shy of its all-time high (3588) and is pulling back in early trading today.

COVID-19 news. New COVID-19 cases in the United States jumped more than 30% week over week for the second straight day to another record high near 120,000, while hospitalizations rose 63% week over week to 3,735 (source: COVID Tracking Project). These troublesome trends unfortunately are likely to continue at least in the short term based on Europe’s experience and cold weather coming, which means more restrictions are likely forthcoming.

LPL Research in the Media

LPL Research Chief Market Strategist Ryan Detrick appeared on CNBC’s Power Lunch.

 

Chris Giordano may be reached at (408) 354-5554 or chris@thegwmg.com

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