Hello, this is Claire Rubin, Private Bank Investment Strategist at Fifth Third Bank with this week’s Economic Beat.
U.S. equities ended higher last week, despite increased volatility and a selloff Friday on news that President Trump and First Lady Melania Trump tested positive for COVID-19. The S&P 500 Index snapped a four-week losing streak, rising 1.5% in total return for the week. The tech-heavy Nasdaq Composite also added 1.5% and the blue-chip Dow Jones Industrial Average rose 1.9%. Stocks were supported by renewed optimism on additional fiscal stimulus, though Democrats and Republicans remain far apart over the size and scope of a package. Talks are expected to continue in the week ahead.
President Trump addressed the nation from the hospital on Saturday, during which he said he expects to be back in the White House soon. Several other individuals close to the president have tested positive, including former New Jersey Governor Chris Christie, advisor Kellyanne Conway and Senator Ron Johnson. As of Friday, more than 33 million people in the world have been infected with COVID-19 and the global death toll has passed 1 million.
The first presidential debate took place between President Trump and former Vice President Joe Biden last Tuesday. The debate was contentious and chaotic, and provided little insight on the policy agenda for either candidate.
The economic calendar was busy and painted a mixed view of the strength of the U.S. economy. The Conference Board’s consumer confidence index came in ahead of estimates, rebounding by the most in more than 17 years as Americans grew more optimistic about the outlook for the economy and job market. The third reading on gross domestic product for the second quarter came in at an annualized 31.4% contraction, slightly better than the previous estimate but still a record decline.
The housing market remains a bright spot, with pending home sales rising 8.8% in August, better than expected. Personal income fell in August by the most in three months, after the government’s supplemental unemployment benefits expired. But consumer spending on goods and services increased 1% for the month, slightly better than economists expected. The Institute for Supply Management’s Manufacturing Purchasing Managers’ Index eased in September after registering the strongest reading since late 2018 in the prior month.
The jobs market was especially in focus. The weekly release on jobless claims showed a bigger decline than forecast in the week ended September 26, as the labor market slowly recovers. Friday’s monthly employment situation report from the Bureau of Labor Statistics showed U.S. job gains slowed in September. Nonfarm payrolls increased by 661,000 following an upwardly revised 1.49 million advance in August. The unemployment rate fell by more than forecast to 7.9%, though the labor force participation rate declined to 61.4%. The report was the last of its kind before November’s presidential election.
In the week ahead, economic data releases include the trade balance, the Job Openings and Labor Turnover Survey and minutes from the Federal Reserve’s latest Federal Open Market Committee meeting. Fed watchers will examine the minutes for future conditions necessary to trigger a rate increase and for the potential for increasing asset purchases. Fed Chair Jerome Powell may provide additional insight during his keynote speech at a conference Tuesday. Vice President Mike Pence and Senator Kamala Harris face off Wednesday in the vice presidential debate. The debate takes on increased importance, given the COVID-19 developments and the chaos of last week’s presidential debate.
As always, we’ll be watching and reporting back to you. Thank you.