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The Good Life Newsletter - Last Week's Technology Selloff & Indicators Of A Continued Labor Market Recovery

Stocks Stall As Recovery Continues

Weekly Update - September 8, 2020

This week's Good Life Newsletter comes to you this Tuesday. We hope you had a lovely and relaxing Labor Day weekend.

The Week on Wall Street

A late week sell-off sent stocks broadly lower as investors took some profits after stocks reached all-time highs earlier in the week. The Dow Jones Industrial Average slid 1.82%, while the Standard & Poor's 500 slumped 2.31%. The Nasdaq Composite index dropped 3.27% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 0.62%.[1][2][3] 


Gravity Reasserts Itself

Stocks hit a wall late last week as the technology companies, which had led the market higher, slipped in Thursday and Friday trading, dragging down the overall market.

The week began on an upbeat note as August momentum continued into the start of September. While participation in the rally on Tuesday and Wednesday was fairly broad, technology stocks continued to be the focus of market strength. But that sentiment changed quickly on Thursday.

With little warning and no obvious catalyst, it remains unclear whether the technology selloff last week was the result of market technicals or a fundamental change in investor outlook. The coming weeks may provide some clarity in this regard. 

Labor Market Recovery Sputters Forward

Last week saw a series of employment-related reports that evidenced a continued labor market recovery.

The Automated Data Processing (ADP) employment survey showed that private payrolls increased by 428,000 in August, falling short of consensus expectations of over 1.1 million.News turned more positive as new jobless claims checked in at 881,000-an improvement from the over one million new claims the prior week. Americans receiving unemployment declined by 1.24 million to 13.3 million-half the peak number in May.[4][5][6]

Finally, the monthly jobs report indicated that nearly 1.4 million non-farm jobs were added last month, with the unemployment rate declining to 8.4%. The progress was predominantly attributable to government hiring, primarily of new Census workers, though the retail, leisure, and hospitality sectors saw gains in new hiring.[7]

THIS WEEK: KEY ECONOMIC DATA

Wednesday: Job Openings and Turnover Survey (JOLTS). 

Thursday: Jobless Claims. 

Friday: Consumer Price Index (CPI).

Source: Econoday, September 4, 2020
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THIS WEEK: COMPANIES REPORTING EARNINGS

Tuesday: Lululemon (LULU), Coupa Software (COUP), Slack Technologies (WORK)

Thursday: Chewy (CHWY), Peloton (PTON)

Friday: Kroger (KR) 

Source: Zacks, September 4, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

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The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.
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[1] The Wall Street Journal, September 4, 2020
[2] The Wall Street Journal, September 4, 2020
[3] The Wall Street Journal, September 4, 2020
[4] CNBC, September 2, 2020
[5] CNBC, September 3, 2020
[6] CNBC, September 3, 2020
[7] CNBC, September 4, 2020