In this week’s recap, stocks are higher as the Dow makes some changes.
Weekly economic update
Presented by Cornerstone Financial Adisory, LLC on August 31, 2020
THE WEEK ON THE WALL STREET
Shares rallied tirelessly last week on positive COVID-19 developments, encouraging economic data, and a supportive policy change in the Fed’s approach to meeting its target inflation rate.
The Dow Jones Industrial Average rose 2.59% while the Standard & Poor’s 500 rose 3.26%. The Nasdaq Composite Index rose 3.39% over the course of the week. The MSCI EAFE index, which tracks developed overseas equity markets, rose 1.19%.1-3
Shares power higher
Investors have been pushing stock prices up all week as hopeful news came with each new day, from announcing a possible COVID-19 treatment to news that negotiators in the US and China had videoconferenced. Despite another large number of new jobless claims, other economic data released during the week suggested continued economic recovery, which further fueled investor enthusiasm for equities.4th
The Fed’s announcement that it would change its inflationary policy, suggesting that interest rates are likely to remain low for a long time, helped propel the market higher. The momentum continued through Friday, leaving the S&P 500 and NASDAQ Composite at new record highs and the Dow Jones in positive territory since the beginning of the year.5
Changes in the Dow Industrials
It was announced last week that the Dow Jones Industrial Average will see some changes. Starting Monday, August 31, Salesforce.com, Amgen and Honeywell International will be added to the 30 shares of Dow Industrials, and Exxon Mobil, Pfizer and Raytheon Technologies will be removed.6th
In part, these changes were prompted by Dow component Apple, which is planning a four-for-one stock split on Monday, August 31st. The Dow Jones Industrial Average is a price-weighted index, and Apple’s split reduces the impact of technology on The Index. The new changes are an attempt to fix this problem.7th
TIP OF THE WEEK
Set a schedule for your financial goals. List what and when you want to achieve and review your progress and the deadlines you set semi-annually or annually.
THE WEEK AHEAD: IMPORTANT ECONOMIC DATA
Tuesday: ISM (Institute of Supply Management) manufacturing index.
Wednesday: Automated Data Processing (ADP) Employment Report. Factory orders.
Thursday: Unemployment claims. ISM (Institute of Supply Management) service index.
Friday: Employment report.
Source: Econoday, August 28, 2020
The Econoday economic calendar lists upcoming releases of US economic data (including key economic indicators), Federal Reserve political meetings, and speeches by Federal Reserve officials. The content has been developed from sources believed to provide accurate information. The forecasts or forward-looking statements are based on assumptions and may not be implemented. The forecasts are also being revised.
THE WEEK AHEAD: COMPANIES THAT REPORT RESULTS
Monday: Zoom video (ZM).
Wednesday: Macys (M), Cloudera, Inc. (CLDR), Mongodb (MDB), Crowdstrike Holdings (CRWD).
Thursday: Broadcom (AVGO), Docusign (DOCU).
Source: Zacks, August 28, 2020
The companies mentioned are for informational purposes only. It should not be viewed as an invitation to buy or sell the securities. Investing involves risk, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and net present value of investments will fluctuate as market conditions change. When sold, investments can be worth more or less than their original cost. Companies can set a new date when reporting profits without notice.
QUOTE OF THE WEEK
“Wisdom is only found in truth.”
JOHANN WOLFGANG VON GOETHE
The weekly riddle
There is a kind of sweet bean that never grows in a garden. What is it?
LAST WEEK RIDDLE: A man jumped out of a small plane without a parachute. When he hit the ground, he wasn’t hurt at all. Why?
ANSWER: The aircraft was parked on the ground.
Investing involves risk, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and net present value of investments will fluctuate as market conditions change. When sold, investments can be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not be implemented and are subject to change without notice.
The market indices discussed are unmanaged and are generally considered to be representative of their respective markets. Index performance is no indication of the past performance of a particular investment. There are no management fees, costs or costs for indices. Individuals cannot invest directly in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is widely believed to be representative of large capitalization companies on the US stock exchange. Nasdaq Composite is an index of the common stocks and related stocks listed on the Nasdaq Stock Exchange and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark for the performance of the major international stock markets, represented by 21 major MSCI indices from Europe, Australia and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of stocks believed to be representative of the stock market in general.
US Treasury bills are guaranteed by the federal government for the timely payment of principal and interest. However, if you sell a Treasury bill before it is due, it may be worth more or less than the price originally paid. Fixed income investments are subject to a variety of risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax implications and other factors.
International investments involve additional risks, including differences in accounting standards, exchange rates, country-specific political risks, foreign taxes and regulations, and the potential for illiquid markets. These factors can make the stock price more volatile.
Please contact your finance professional for more information.
This content was developed from sources believed to provide accurate information. The information in this material is not intended to provide tax or legal advice. Please contact legal or tax professionals for specific information about your individual situation. This material has been developed and produced by FMG Suite to provide information on a subject that may be of interest. FMG is not affiliated with the named agent, financial professional, registered investment advisor, broker-dealer or any government or SEC registered investment advisory firm. The opinions expressed and the material provided are for general information and should not be viewed as a solicitation to buy or sell any securities.
Copyright 2020 FMG Suite.
- The Wall Street Journal, August 28, 2020
2. The Wall Street Journal, August 28, 2020
3. The Wall Street Journal, August 28, 2020
4. CNBC.com, August 27, 2020
5. CNBC.com, August 27, 2020
6. The Wall Street Journal, August 24, 2020
7. CNBC, August 20, 2020
The Wall Street Journal, August 28, 2020
The Wall Street Journal, August 28, 2020
Treasury.gov, August 28, 2020
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