Stock Market in Review This Week – 10/30/2020

No poor attempt at a funny comment this week. Just a reminder to stay healthy and positive.

This week the S&P 500 closed at 3,269.96, a loss of 5.64%, the NASDAQ finished at 10,911.59, a loss of 5.51%, and the Dow ended at 26,501.60, a loss of 6.47%.

Friday was the last day of trading for October. The S&P started October at 3,385.87 and ended at 3,269.96, a loss of 3.4% for the month.

Summary

The market saw its worst week since March, as all three major indexes were down by more than 5%. Concern over the rising number of COVID-19 cases was a big factor in the market’s performance. Investors were also worried due to the uncertainty of the election next week. A bunch of companies reported earnings this week, including the biggest names in technology.

Worth Mentioning

• GDP expanded at 33.1% in the third quarter, above analysts’ expectations of 32%. This record pace comes after GDP shrank a record 31.4% in the second quarter
• German multinational software corporation SAP was down about 23% on Monday and 29% for the week after cutting its revenue and profit forecasts for the year
• US consumer spending increased by 1.4% in September, following August’s increase of 1% and above estimates of 1%. Personal income rose by 0.9% for the month, above estimates of 0.4% and a turnaround from the 2.7% decrease in August
• Pending home sales fell 2.2% in September from August, due to rising home prices
• Weekly jobless claims totaled 751,000 for the previous week, lower than the expected 778,000
• Chinese financial technology giant, Ant Group, is expected to be valued as the largest IPO of all time
• The Los Angeles Dodgers won the World Series on Tuesday, their first time since 1988

Big Tech Earnings

• Microsoft was the first to report this week as it announced Tuesday after the market closed that they beat on EPS and revenue for the quarter. Microsoft’s cloud service Azure saw growth higher than estimated. They also announced they expect guidance for the next quarter lower than what analysts are expecting. The stock was down on the news Wednesday and down for the week

The rest of the four all reported Thursday after market close.

• Apple reports a laundry list of metrics compared to analysts’ expectations. Year over year iPhone sales were down and the company did not provide any guidance for next quarter. The stock was down big Friday
• Amazon was also down Friday, even after posting better than expected quarterly earnings. The company has benefited from online shopping caused by the pandemic. Their cloud service AWS reported numbers in line with expectations
• Google’s parent company, Alphabet, beat on all major metrics for the quarter. Google’s annual ad revenue grew 9.8% this quarter. The stock eked out the smallest of gains for the week
• Facebook beat analysts’ expectations for EPS and revenue. They also beat expectations for daily active users, monthly active users, and average revenue per user

Other Earnings

• Comcast reported quarterly beats on EPS, revenue, and net adds of high-speed internet customers. They announced their streaming service, Peacock, has almost 22 million sign-ups
• Mastercard missed on EPS and revenue estimates this quarter and warned the slowdown in travel could hurt them for the foreseeable future. Their stock was down more than 11% this week
• General Electric’s shares jumped Wednesday on the news the company beat expectations for both EPS and revenue, but their stock was still slightly negative for the week
• Shopify reported better than expected EPS and revenue numbers due to the growth in online shopping, but the stock still struggled this week
• Twitter reported better than expected EPS and revenue. But the company had less monetizable daily active users than expected. The stock got walloped Friday as it was down more than 20%
• Pinterest was up more than 30% at one point Thursday morning after reporting beating expectations on EPS, revenue, monthly active users, and average revenue per user. The stock benefited from advertisers who boycotted other social media sites
• Ford shares were up big Thursday morning after beating on revenue and EPS due to stronger than expected demand but they still closed down for the week
• Boeing shares were down double digits for the week after announcing during their earning call they will continue cutting jobs due to the pandemic
• Caterpillar beat estimates this quarter but saw a 54% drop in earnings due to a decline in sales
• Exxon Mobil had a busy week. On Wednesday they announced they were keeping their dividend at 87 cents per share, the first time since 1982 the company did not raise it. On Thursday they announced additional layoffs caused by the pandemic. And on Friday they announced earnings as revenue was down almost 30%. Their stock ended the week better than any of the three major indexes

Looking Ahead to Next Week

• Tuesday is Election Day
• The unemployment rate will be announced on Friday
• The Federal Reserve meets Wednesday and Thursday, and Chairman Powell will give a briefing Thursday afternoon
• Notable companies reporting earnings include Clorox, PayPal, Mondelez International, Qualcomm, AstraZeneca, Uber, Roku, Zillow, and Alibaba

Weekly Change In Each Sector:

Treasury Yield Rates

The 10-Year ended the week at 0.88%, compared to last week’s end of 0.85%

The 2-Year ended the week at 0.14%, compared to last week’s end of 0.18%