John Hancock: Weekly Market Recap Week Ended October 23rd

Momentum shift

A three-week string of gains ended as the major stock indexes slipped around 1% entering the busiest stretch of what’s so far been a strong quarterly earnings season. Stocks couldn’t recover from a Monday decline fueled by a setback in congressional negotiations over a coronavirus relief package. 

Yields surge

The yield of the 10-year U.S. Treasury bond climbed on Friday for a seventh straight trading day to an intraday peak of 0.87%, the highest level in more than four months. As recently as early August, the benchmark 10-year yield was as low as 0.52%.

Regaining strength

A monthly indicator of U.S. economic activity signaled the fastest rate of expansion in 20 months for both the services and manufacturing segments of the economy. However, the survey data from the IHS Markit Purchasing Managers’ Index also showed that companies acted cautiously with coronavirus still spreading and the November 3 election creating further uncertainty. 

GDP flip-flop?

Thursday’s release of the government’s initial estimate of third-quarter U.S. economic growth is expected to be the most closely watched report of the week, as it could produce a record-breaking growth figure for a single quarter. In this year’s second quarter, GDP plunged 31.4% amid the pandemic. For the third quarter, economists are expecting a sharp reversal, with most forecasting growth of around 30.0%. 

Source: https://wmr.jhinvestments.com/