Stocks staged a powerful rally last week, riding a wave of optimism over the prospect of the passage of a new fiscal stimulus bill.
The Dow Jones Industrial Average rose 3.27%, while the Standard & Poor’s 500 increased 3.84%. The Nasdaq Composite index gained 4.56% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 2.23%.1,2,3
A mid-week tweet by President Trump announcing that he was ending stimulus negotiations sent stocks lower. Losses were exacerbated by sharp declines in some mega-cap technology companies as details emerged from a House Judiciary subcommittee report on its investigation into their competitive practices.4
Stocks quickly reversed direction, climbing after the President tweeted that he would sign a limited stimulus bill, but lawmakers appeared to reject a piecemeal approach.
Stocks consolidated on Friday, helped by continuing stimulus talks and new election polls that suggested that the risk of a contested outcome appeared to be fading.
Small Cap Rally
Last week, the Russell 2000 Index rose 6.33%, outperforming the S&P 500 by 2.4%.6
While this outperformance may be fleeting, a potential broadening of the stock market rally may be considered a healthy development.
As is often the case, company guidance about the future earnings may be of greater interest to investors than past results.
THIS WEEK: KEY ECONOMIC DATA
Source: Econoday, October 9, 2020
THIS WEEK: COMPANIES REPORTING EARNINGS
Source: Zacks, October 9, 2020
1. The Wall Street Journal, October 9, 2020
2. The Wall Street Journal, October 9, 2020
3. The Wall Street Journal, October 9, 2020
4. CNBC.com, October 6, 2020
5. The Wall Street Journal, October 8, 2020
6. The Wall Street Journal, October 9, 2020
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Weekly Market Insights: Stocks Rise, Stimulus Uncertain
October 14, 2020