Market Update – September 19, 2020

Major U.S. stock indices finished slightly lower, reversing course from gains earlier in the week after digesting Wednesday’s latest outlook from the Federal Reserve. Unemployment data returned to a better state after last week’s discouraging report.

For the week, the S&P 500 Index fell 0.64% while the Dow Jones Industrial Average lost 0.03%. Year to date, the S&P is up 2.75% while the Dow is down 3.09%. Federal Reserve Chairman Jerome Powell reiterated that short-term interest rates will likely continue at their current near-zero levels through 2023, even as he stressed the need for additional government fiscal stimulus. “The recovery has progressed more quickly than generally expected,” Powell said during a news conference. “Even so, overall activity remains well below its level before the pandemic, and the path ahead remains highly uncertain.” Markets seemed to be unsettled by his comments, especially in light of the ongoing political impasse over another coronavirus aid package.

This week’s unemployment data was more promising. Weekly first-time unemployment claims were 860,000, down 24,000 from last week. Continuing claims fell 757,000 from last week to 12.6 million. The Federal Reserve’s latest projection on unemployment predicts that the unemployment rate will improve to 7.6% by the end of 2020, and 5.5% by December 2021.

International investing continues to be an important component of a diversified portfolio. Important international developments this week included Yoshihide Suga officially being named as Japan’s new Prime Minister, replacing Shinzo Abe. Suga has indicated that he will continue Abe’s economic policies as Japan strives to pull out of their prolonged economic funk. However, Suga’s tenure may be under threat sooner rather than later, as a new parliamentary election must be held by October 2021, but a snap election could be called as soon as next month. Additionally, China’s economic recovery accelerated in August, as industrial production rose and consumer spending grew for the first time this year.

As always, please feel free to contact us with any questions about the economy and your financial plan.

We hope you have a wonderful weekend. And wishing a happy and safe new year to all celebrating Rosh Hashanah!

Nathan Mersereau will continue posting short videos to provide timely insights and advice. We will post links to Nathan’s video updates across all of our social media channels.

You can follow us on YouTube, LinkedIn, Facebook and Twitter.