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Bob Carey
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  US Stock Markets Ended August 7, 2020
Posted Under: Weekly Market Commentary
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Equities continued to move higher amid uncertainty around an extension of unemployment benefits and continued tensions with China. As of the close of markets on Friday, an agreement between the House Democrats and Senate Republicans on a new round of federal stimulus is still trillions apart. In the latest salvo against China, President Trump signed an executive order that imposed a 45-day deadline for TikTok to sell to an American company or cease operations in the U.S. In economic news, the U.S. added 1.8 million jobs in July versus expectations for 1.5 million, dropping the unemployment rate to 10.2%. This week in earnings lead to some large selloffs in technology darlings that beat earnings and provided strong guidance but could not satisfy lofty expectations. Shares of Fastly Inc., a player in edge computing, fell nearly 20% after revealing 12% of revenues are tied to TikTok and revenue expectations that were only slightly above expectations. Despite growing revenue by 68%, Datadog, Inc. fell sharply after reporting a deceleration in growth on softening public cloud spending. Twilio, Inc. pared its year-to-date gain to 148% after announcing an inline quarter with rising expectations. Industrial stocks were the top performers for the week as additional aid to the airlines is likely and the international travel ban was lifted. Although volatile, market leadership started to slightly shift towards small-caps, cyclicals and value names before the start of earnings season. Since July 9th, the Russell 2000 has returned 11.6% versus 6% for the S&P 500. For continued follow through, cyclicals will likely need continued improvement in economic activity and a rebound of fundamentals for many of the hardest hit areas of the market.
Posted on Monday, August 10, 2020 @ 8:22 AM • Post Link Share: 
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