Investors Head Into the Weekend on a Positive Note…..

U.S. equities finished out a rough week on a positive note with solid gains, but the Dow and S&P 500 Index suffered a fourth-straight week of losses. Technology stocks led the way after being at the head of the pack in the pullback to near correction territory since early September. Hopes of progress on the stalemate for fiscal relief surfaced with the House reportedly set to unveil its new relief bill, and another dose of relatively favorable economic data in the form of the business investment component of durable goods orders, appeared to lend support. However, heightened political uncertainty remained and uneasiness regarding the economic implications of the resurgence of new COVID-19 cases in Europe to keep investors wary. In equity news, Costco Wholesale saw some pressure despite delivering another solid quarterly performance and Novavax rallied after initiating a late-stage study in the U.K. of its vaccine candidate. Treasury yields were nearly unchanged and the U.S. dollar continued to bounce off a recent near two-year low. Gold and crude oil prices were lower. Markets in Europe and Asia finished the week mixed.

The Dow Jones Industrial Average rose 359 points (1.3%) to 27,174, the S&P 500 Index gained 52 points (1.6%) to 3,298, and the Nasdaq Composite increased 241 points (2.3%) to 10,914. In moderate volume, 800 million shares were traded on the NYSE and 3.7 billion shares changed hands on the Nasdaq. WTI crude oil inched $0.06 lower to $40.25 per barrel and wholesale gasoline gained $0.02 to $1.19 per gallon. Elsewhere, the Bloomberg gold spot price fell $5.40 to $1,862.67 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% higher at 94.59. Markets were mixed for the week, as the DJIA lost 1.8% and the S&P 500 declined 0.6%, while the Nasdaq Composite gained 1.1%.

Durable goods orders report mixed to close out the busy week

August preliminary durable goods orders rose 0.4% month-over-month (m/m), versus the Bloomberg estimate of a 1.5% rise and compared to July’s upwardly-revised 11.7% increase. Ex-transportation, orders also grew 0.4% m/m, versus forecasts of a 1.0% increase and compared to July’s favorably-adjusted 3.2% gain. Moreover, orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, gained 1.8%, compared to projections of a 1.0% rise, while the prior month’s figure was upwardly-revised to a 2.5% increase.

Orders for computers and related products, communications equipment and machinery all rose solidly, while demand for motor vehicles and parts and electrical equipment, appliances and components declined noticeably after solid gains in the prior months.

The data concludes the week that saw a heavy dose of Feds-peak, with Federal Reserve Chairman Jerome Powell delivering three-days of Congressional testimony. Powell’s remarks this week continued to stress that the Central Bank will hold its unprecedented accommodative policy intact for years to ensure the economic recovery from the severe COVID-19 pandemic disruption. Although a little vague on its recent shift in monetary policy framework, the Fed continues to prioritize combating the stubbornly elevated unemployment levels over inflation and Powell noted that additional fiscal support likely will be needed as uncertainty remains. Powell added that, “We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.”

Treasuries were little changed, as the yields on the 2-year note and 30-year bond were flat at 0.13% and 1.40%, respectively, while the yield on the 10-year note dipped 1 basis point to 0.65%.

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