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Tech, Communication Services, and Consumer Discretionary Sectors Rally

Weekly Update – August 21, 2020

  • The S&P 500 rose 0.7% last week to a fresh record close as the technology, consumer discretionary and communication services sectors posted strong gains, outweighing declines led by energy and financial stocks.
  • The market benchmark ended the week at 3,397.16, up from last Friday’s closing level of 3,372.85. The new closing high was just slightly above a fresh record intraday high that was also recorded Friday at 3,399.96. The index is now up 5.2% for the year to date after having jumped 15% in the past three months.
  • This week’s record highs came amid a rally in tech, communication services and consumer discretionary heavyweights including Apple (AAPL), Microsoft (MSFT), Facebook (FB), Amazon.com (AMZN) and Alphabet (GOOGL) as the COVID-19 pandemic has increased demand for the companies’ products and services.
  • The gains, however, were kept in check as investors were concerned by an increase in weekly jobless claims. Minutes from last month’s Federal Open Market Committee meeting showed the members of the monetary policy-setting group expected the COVID-19 pandemic would continue to “weigh heavily” on the economy for some time.
  • The technology sector had the largest percentage increase of the week, up 3.6%, followed by a 1.8% rise in consumer discretionary and a 1.6% boost in communication services. However, the energy sector had the largest percentage drop of the week, tumbling 5.7%, followed by a 3.4% drop in financials. Other sectors in the red included utilities, industrials and materials.
  • The gains in Apple’s shares sent the consumer technology company’s market capitalization above $2 trillion to a fresh intraday high Friday just under $500 at $499.47. Apple’s shares closed the week up 8.2% from last Friday. Among the technology sector’s other strong gainers, Microsoft (MSFT) added 2.0%.
  • In consumer discretionary, Amazon rose 4.3% this week as the company unveiled plans to expand its physical offices and add about 3,500 jobs in the cities of New York, Phoenix, San Diego, Denver, Detroit and Dallas.
  • In communication services, Facebook shares climbed 2.2% this week and Alphabet added 4.7%.
  • On the downside, the energy sector’s drop came as crude-oil futures fell amid concerns by the Organization of the Petroleum Exporting Countries about the effects of the continued COVID-19 pandemic on fuel consumption. Decliners in the sector included Exxon Mobil (XOM), down 5.1%, and Chevron (CVX), down 5.8%.
  • The financial sector’s decliners included Citigroup (C), whose shares fell 6.9% as the bank heightened its effort this week to recover portions of a $900 million payment it says it accidentally sent to Revlon Inc. lenders.
  • Next week, the market will get updated housing data Tuesday, including new home sales for July and the Case-Shiller national home-price index for June. Wednesday, investors will see July durable goods orders and core capital goods orders. Thursday’s slate of economic reports include revised Q2 gross domestic product as well as pending home sales for July. Friday, July consumer spending and core inflation and August consumer sentiment are among the reports on tap.

CPWM Weekly Market Monitor (2020.08.21)

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