The ‘Pause to Refresh’ Continues

Stocks finished the week mixed to lower with both the Dow and S&P 500 notching their fourth consecutive week of losses.

September 28, 2020    |    By Mike Schwager

Performance for Week Ending 9/25/2020:

The Dow Jones Industrial Average (Dow) finished off 1.75%, the Wilshire 5000 Total Market IndexSM (Wilshire 5000SM) fell 0.70%, the Standard & Poor’s 500 Index (S&P 500) lost 0.63% and the Nasdaq Composite Index (NASDAQ) bucked the trend to finish up 1.11%. Sector breadth was negative with 8 of the 11 S&P sector groups closing lower. Energy (-8.60%) was the worst performing sector followed by Materials (-4.62%) and Financials (-4.24%). On the upside, Technology (+2.13%) was the best performer.

Index* Closing Price 9/25/2020 Percentage Change for Week Ending 9/25/2020 Year-to-Date Percentage Change Through 9/25/2020
Dow 27173.96 -1.75% -4.78%
Wilshire 5000 33816.19 -0.70% +2.83%
S&P 500 3298.46 -0.63% +2.09%
NASDAQ 10913.56 +1.11% +21.63%

*See below for Index Definitions

MARKET OBSERVATIONS: 9/21/20 – 9/25/20

Stocks finished the week mixed to lower with both the Dow and S&P 500 notching their fourth consecutive week of losses. A rebound in the Technology sector left the Nasdaq Composite higher on the week. The losses in the broader market reflected an uptick in new Covid cases in the US and Europe, fading likelihood of additional fiscal stimulus ahead of the November election, and worries the momentum behind the economic recovery is beginning to slow. Month-to-date the S&P 500 is off nearly 5.8%, on track for the worst monthly performance since March when the broader market fell by 12.51%.

Economic data continues to suggest that recovery remains intact, although the momentum is clearly starting to slow. Last week several Federal Reserve officials, including Fed Chair Powell, made it very clear that they believe the US economy will need another dose of fiscal stimulus to keep the economy from stalling in the months ahead. The Fed’s push for additional fiscal stimulus had some worrying the monetary policy may have run its course and the Fed is starting to run out of ammo. While clearly not the case, the Fed also knows that monetary policy tends to work with a lag and fiscal stimulus can have a very short lead time. In addition, with their fingers on the pulse of the economy, who better than Fed officials to try to get lawmakers back to the bargaining table. While the likelihood of getting a deal pieced together before the election continues to fade, the recent turbulence in the markets seems to have caught lawmakers’ attention with both Speaker Pelosi and Treasury Secretary Mnuchin vowing to reopen talks.

Market View – A Pause to Refresh: While the downside momentum could continue in the weeks ahead, we believe the market is in a consolidation phase following the very strong performance off the March lows and not a broader reversal of the market’s uptrend. We remain upbeat on the economic recovery and earnings expectations continue to be revised to the upside. The healthcare system seems to be better prepared for any new flare up in COVID cases and paradoxically, the market knows that the worst things get, the more likely the Federal Reserve and policymakers will inject additional stimulus into the economy. While nothing moves in a straight line, we continue to believe the return profile over the next 12 – 24 months should remain asymmetrical, with an upward bias.

The Week Ahead: The focal point of the week ahead will the first (of three) Presidential debates on Tuesday between President Trump and former VP Joe Biden. On the data front, Friday’s report on the monthly jobs situation will be closely watched. According to Bloomberg, monthly nonfarm payrolls during September are expected to rise by 850K, down sharply from the 1.37 million increase during August. The unemployment rate is forecast to fall to 8.2% from 8.4% during the prior month. Other data reports of interest include; the September consumer confidence index, the ADP September employment report, the Institute for Supply Management (ISM) PMI Manufacturing Index, August pending home sales, August construction spending, August personal income and spending, and the University of Michigan September consumer sentiment survey. Earnings reports will continue to trickle in with five members of the S&P 500 scheduled to release results. It will be another busy week for Fed speeches with over a dozen presentations on the docket.


The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Wilshire 5000 Total Market IndexSM represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.

Standard and Poor's 500© Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.

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