New Records are Set by Google and Amazon
New Records are Set by Google and Amazon
Market News

New Records are Set by Google and Amazon

Market News

Even though September is a traditionally grim month for the stock market, it kicked off on a strong footing and stocks continued to advance on Wednesday. The markets were encouraged by some positive US economic data and a slow down in the rate of the spread of COVID-19. Even though a report on monthly private payroll gains sharply missed expectations, equities continued to hold a firm tone Wednesday morning. Tech stocks spearheaded the charge with Amazon (AMZN) and Google (GOOG) opening at new record highs. However, Apple (AAPL) and Tesla (TSLA) pulled back sharply from their post-stock split highs.

Meanwhile, Macy’s (M) released an extremely encouraging earnings report that alleviated fears while AMC (AMC) reported that it will reopen more theatres over the coming weekend. That sent its stock on an upward frenzy.

Equities were further buoyed by hopes of direct support to individuals and businesses. After the congressional hearing of the Select Subcommittee on the Coronavirus Crisis, Treasury Secretary Steven Mnuchin said that reaching a bipartisan agreement of further fiscal stimulus was still possible.

Historically speaking, stocks have always performed poorly during September. As per LPL Financial, it has been the worst-performing month for markets for almost 70 years. The S&P 500 (^GSPC) has dropped about 1% on average that month since 1950.

U.S. data has been consistently resilient over the last few weeks. Construction spending might have nearly flat in July, but with the prior month revised sharply higher. The manufacturing sector has also continued its rebound and the ISM Manufacturing Index has hit its highest value since August 2018. New orders increased during the month, but unfortunately, the employment component is still languishing in recession territory, pretty much in line with the labor market’s fragility.

According to Alan Ruskin, Deutsche Bank’s chief international strategist: “The August global manufacturing data is slightly uneven across countries, but by region the message is entirely consistent with continued recovery.” He went on to add that the sector was in the process of “adjusting to the new normal” since lockdown restrictions were eased.

However, reports on the labor market have shown a slight recovery with ADP reports of private payroll gains in August totaling 428,000, a little less than the expected 1 million jobs that were supposed to come back this month. However, investors more or less shrugged off the ADP print in pre market trading.

After the best month in decades for stocks, investors are hoping that a combination of support from the Federal Reserve, rising optimism for a COVID-19 vaccine that may backstop economic growth, and a new stimulus package will help prolong this upwards trend.

Goldman Sachs said: “while equities have never been as expensive since the Tech bubble, based on a 24-month [price/earnings basis], the equity risk premium is close to an all-time high, suggesting that equities have rarely been as attractive relative to bonds.”

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