Week Ending: October 16, 2020
U.S. stock prices were mixed and the S&P 500 Index advanced for the third consecutive week. Small and medium sized company stocks generally lagged large company peers, while growth stocks maintained their leadership position and outperformed value. Performance diverged across sectors as prices declined in the energy, financials, and real estate sectors. However, those losses were more than offset by gains in the industrials, communication services, utilities, information technology, and consumer staples sectors. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed developed foreign markets.
U.S. Treasury yields declined this past week (bond prices and yields move in opposite directions) as investors and the Fed continue to support demand for high quality bonds. Investment grade corporate bonds were the top performing asset class, followed by gains from U.S. government bonds. High yield (below investment grade) corporate bonds also delivered positive gains, but lagged investment grade peers. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5%.
Initial unemployment claims for the week unexpectedly rose from 840,000 to 898,000 and approximately 10 million Americans continue to claim ongoing unemployment benefits. Economic data released during the week was headlined by encouraging retail sales that reported an increase of 1.9% for the month of September and more than 5% compared to September 2019. Some of the largest cities in Europe, such as Berlin and Paris, implemented stricter and more targeted measures to contain the spread of the coronavirus.