Weekly Market Review: October 26, 2020

Weekly Market Review: October 26, 2020

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The election of 435 House members, 33 Senators and the presidency is just over a week away (on Tuesday 11/03/20). Democrats have hopes of not only taking back the White House, but they believe total control of Congress is a possibility. If that would happen, bond market investors anticipate that government spending could grow significantly. Increased spending (note that Uncle Sam already spent $6.6 trillion during fiscal year 2020) could lead to higher inflation and higher interest rates. Concern over rising rates pushed the yield on the 10-year Treasury note to 0.84% as of the close of trading on Friday 10/23/20, its highest level since 6/08/20 (source: Treasury Department).

The S&P 500 is up +8.9% YTD (total return) through last Friday. The stock index got to that result by gaining +5.1 % (total return) from the end of 2019 through 2/19/20, then falling off a cliff and losing 33.8% (total return) through 3/23/20, but now has come roaring back with a +56.5% bull market gain (total return). The last time a “bear” market and a “bull” market both occurred over such a short period of time was 29 years ago in 1991 (source: BTN Research).

There are 319 drugs globally that are in the development stage for the treatment of the COVID-19 virus. Last week, the Food and Drug Administration (FDA) approved the first drug out of the 319 for COVID-19 patients. The treatment drug – not a vaccine – is believed to cut a patient’s recovery time from 15 days to 10 days (source: National Institutes of Health).

Notable Numbers for the Week:

  1. NO BOSS – 20% of American workers between the ages of 18-49 are self-employed. 46% of American workers between the ages of 65-69 are self-employed (source: National Bureau of Economic Research, September 2019).
  2. DOUBLE IN THIRTY YEARS – It would take $1,961 in September 2020 to have the same purchasing power as
    $1,000 in September 1990 (source: CPI Inflation Calculator, Bureau of Labor Statistics).
  3. WOOD – The price of lumber increased nearly 50% from 4/30/20 to 8/31 /20, the largest four-month increase ever in the cost of lumber based upon data maintained since 1949 (source: Bureau of Labor Statistics).
  4. KIDS COST MONEY – The United States had 3.79 million births in 2018, the latest calendar year for which data has been released. On 6/15/20, the Brookings Institute forecasted that the COVID-19 virus and subsequent U.S. recession will result in a drop of births in 2021 by 300,000 to as much as 500,000 (source: Brookings Institute).

Mark R. Reimet, CFP®
CERTIFIED FINANCIAL PLANNER™

Jodie Booth
Financial Advisor