Market Summary

A month-long losing streak for the S&P 500 ended this week as the Index recorded a +1.5% return. In what was a bruising September for Stocks, the S&P fell 3.9% over the month, with no respite in sight for the energy sector. This year’s worst-performing sector declining 14.6% over the month. Despite the September set back, the S&P 500 recorded its best back-to-back quarters since 2009 over the last two quarters.

Positive market sentiment was driven by the approval of a $2.2 trillion virus relief package on Thursday; however, the bill’s future remains uncertain as this approval from the Democratic-led house of representatives does not guarantee passage in the Republican-led Senate. That being said, Trump appears to be pushing for an agreement via twitter, and House of Representatives Speaker Nancy Pelosi expressed optimism over the weekend, suggesting that Trump’s infection “kind of changes the dynamic.” This optimism, combined with a disappointing jobs report, could help fast track a compromise over the coming days.

Although the U.S. economy added 661,000 jobs in September, the falling rate of job growth highlights the slowdown in the pace of the economic recovery. Of the 22 million jobs lost in March and April, roughly half have since been recovered.

Markets fell modestly on Friday following the announcement that President Trump and the First Lady had tested positive for the virus, adding more uncertainty to an already perplexing presidential campaign.

In company-specific news, JPMorgan Chase, the largest U.S Bank, has admitted to ‘spoofing’ The Commodity Futures Trading Commission said in a statement that JPMorgan was involved in “deceptive conduct” over a period of at least eight years that included hundreds of thousands of so-called spoof trades; orders that were placed and quickly canceled because they were never intended to be executed, designed to deceive investors. JPMorgan will pay almost $1 billion in the largest-ever federal fine for the practice.

Equities

1.50%S&P 500

After Fridays close, the S&P 500 was down 6% from its early September record high. The index has gained over 50% following an extended surge from its low in late March, up 3.6% for the year.

Currency

0.80%USD/EUR

The U.S. Dollar fell 0.8% versus the Euro. The currency pairing held close to its recent range. Despite uncertainty around the economic recovery, a more significant flight-to-safety, which would push the U.S. dollar higher, has yet to materialize.

Bond Yields

0.70%US 10Y TREASURY YIELD

The 10-Year Treasury Yield rose slightly over the week but again remains range-bound between 0.6% and 0.7% as uncertainty around the upcoming presidential election and failure on the virus containment front prevents a migration towards riskier assets.

Commodities

7.90%CRUDE OIL

Oil continued to slip as rising coronavirus cases dampen the demand outlook, with crude oil down nearly 8% for the week, now sitting at $37 a barrel.

best5.00%Real Estate

Worst2.80%Energy

Market Outlook

President Trump’s diagnosis is likely to exacerbate the prospects for an even more disorderly election next month than previously anticipated. Altering the potential schedule of future debates in the coming weeks.

Expect markets to be led by updates on the President’s condition and any advancements in the fiscal stimulus negotiations as opposed to any changes to economic data over the near term.

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