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Industrials, Communication, Utilities, & Tech Climb as COVID Concerns Persist

Weekly Update – October 16, 2020

  • The S&P 500 index edged up 0.2% last week as US corporations’ Q3 financial results mostly surpassed analysts’ expectations but concerns about the COVID-19 pandemic persisted as case counts climbed.
  • The S&P 500 ended the week at 3,483.81, up from last Friday’s closing level of 3,477.13. This marks the measure’s third consecutive weekly gain. It is now up 3.6% for the month of October.
  • The industrial sector had the largest percentage increase of the week, up 1.1%, followed by a 0.8% climb in communication services and gains of 0.8% each in utilities and technology. Consumer staples also rose, climbing 0.7%.
  • On the downside, the real estate sector led the way with a 2.2% drop for the week, followed by a 2% decline in energy. Financials, health care, materials and consumer discretionary were also in the red.
  • Investors were torn this week between focusing on US corporations’ better-than-expected Q3 financial results or the country’s jump in daily new COVID-19 cases to above 60,000.
  • The uncertainty of the upcoming election and the on-again, off-again nature of stimulus talks only added to investors’ jitters, as did a rise in weekly jobless claims to the highest level in seven weeks.
  • In the industrial sector, gainers included Caterpillar (CAT), whose shares rose 6.2% amid positive analyst actions. Analysts at Wells Fargo upgraded its investment rating on Caterpillar’s stock to overweight from equal-weight while Credit Suisse raised its price target on the shares.
  • In communication services, Walt Disney (DIS) shares rose 1.5% as the content provider said it will put its distribution and commercialization businesses under one group while the content unit will focus on producing original content for its streaming services as part of its new structure.
  • In real estate, the decliners included SL Green Realty (SLG). Shares of the real estate investment trust, which is the largest office landlord in Manhattan, fell 8.0% this week ahead of its Q3 results, which are set to be released next week.
  • Next week, the earnings calendar features a number of large US companies, including International Business Machines (IBM) on Monday, Procter & Gamble (PG) on Tuesday and Intel (INTC) and Coca-Cola (KO) on Thursday.
  • On the data front, next week’s schedule features multiple readings on the housing market, with the National Association of Home Builders index due Monday, housing starts and building permits expected Tuesday and existing home sales set for Thursday.
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