US Stock Markets Ended Oct. 30, 2020
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The S&P 500 posted its worst weekly return since March due to a risk-off tone as we enter election week. Mega cap technology underwhelmed high expectations, and COVID-19 cases hit new highs across the U.S. and Europe. The five largest technology firms, which account for over 20% of the S&P 500's weight, reported mostly disappointing results. While big technology came in ahead of consensus estimates, marginal beats and disappointing future guidance weighed across the sector. Apple Inc. missed on iPhone sales and did not provide an outlook for next quarter. Inc. handily beat estimates but future margins disappointed traders due to higher COVID-19 related expenses. Despite revenue increasing by 12%, shares of Microsoft Corp. fell over 7% on a cautious guide. By contrast, Alphabet Inc. posted material upside to expectations on strength from YouTube and a resurgence in digital advertising that carried across Facebook, Inc. and Pinterest, Inc. as well. With the majority of the S&P 500 market cap reporting results to date, over 85% of firms have beat on the bottom line. In economic news, gross domestic product grew at a 33.1% annualized rate for the third quarter, led by a recovery in consumer spending. Looking ahead to next week, Tuesday's election will take center stage with various different outcomes likely to drive future policy change across different industries. Longer-term, corporate fundamentals and normalization of the U.S. economy will likely be bigger drivers of return, in our view. Its widely believed that phase three results will be released in November from multiple vaccine candidates, which could be a big step in the right direction for a full reopen of the economy.
Posted on Monday, November 2, 2020 @ 8:05 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.