Stocks Struggle Ahead of Key Events Including First Presidential Debate…..

U.S. stocks finished the day off the pace, giving up some of the gains posted from the prior two-day rally, as investors remained cautious ahead of tonight’s first presidential debate and key reads on Chinese business activity. Further, the resurgence of COVID-19 cases in the U.S., and notably Europe, remained at the forefront of investors’ minds, as the biggest rebound in Consumer Confidence since April 2003 was largely shrugged off by the markets. Meanwhile, the House’s new $2.2 trillion fiscal relief bill was unveiled, but will likely face many of the same issues that have plagued other efforts for stimulus, as lawmakers remain at odds over the size and scope of the deal. In equity news, McCormick offered a mixed Q3 earnings report, Big Lots fell despite upbeat guidance and Beyond Meat jumped after expanding its relationship with Dow member Walmart. Treasury yields were little changed and the U.S. dollar pared a recent resurgence. Crude oil prices were lower and gold gained ground. Asia finished mixed and Europe closed lower.

The Dow Jones Industrial Average fell 131 points (0.5%) to 27,453, the S&P 500 Index lost 16 points (0.5%) to 3,335, and the Nasdaq Composite decreased 32 points (0.3%) to 11,085. In moderate volume, 703 million shares were traded on the NYSE and 3.3 billion shares changed hands on the NASDAQ. WTI crude oil lost $1.31 to $39.29 per barrel and wholesale gasoline was $0.04 lower at $1.17 per gallon. Elsewhere, the Bloomberg gold spot price gained $15.76 to $1,897.24 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.4% lower to 93.86.

The stock markets have seen some wild swings in September, rebounding the past couple sessions from a 4-week decline to near correction territory as the markets grapple with the looming highly-contentious presidential election and rising new cases of COVID-19. Meanwhile, economic data has been mixed with manufacturing, housing and consumption data continuing to paint a recovery picture, though unemployment remains stubbornly elevated and expectations of a new fiscal relief package have been dampened by the festering stalemate on Capitol Hill.

Consumer Confidence jumps, home prices rise, trade deficit widens…..

The Conference Board’s Consumer Confidence Index rose more than expected to 101.8 in September, from August’s upwardly-revised 86.3 level, and versus the Bloomberg estimate calling for an improvement to 90.0. The index rebounded by the most in 17 years and hit the highest level not seen since March as both the Present Situation Index and the Expectations Index of business conditions for the next six months jumped. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—increased back to positive territory, rising to 2.9 from the -2.2 level posted in August.

The 20-city composite S&P CoreLogic Case-Shiller Home Price Index posted a 4.0% y/y gain in home prices in July, versus estimates of a 3.6% increase. Compared to the prior month, home prices were up 0.6% on a seasonally adjusted basis, north of forecasts of a 0.1% gain.

The advance goods-trade balance showed that the August deficit widened more than expected, coming in at $82.9 billion, versus estimates calling for it to widen to $81.8 billion from July’s upwardly-adjusted deficit of $80.1 billion.

Preliminary wholesale inventories rose 0.5% m/m for August, compared to expectations of a 0.1% dip, and versus July’s positively-revised 0.1% decline.

Treasuries were largely unchanged, with the yields on the 2-year note and 30-year bond little changed at 0.13% and 1.41%, respectively, while the yield on the 10-year note dipped 1 basis point to 0.65%.

©2020 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.