Drilling down
U.S. stocks hit new highs
The S&P 500 Index was up 8.47% for the 3rd quarter – from 3,100.29 at the 2nd quarter close to 3,363.00 at the end of the 3rd quarter. The total return of the S&P 500 (including dividends) was up 8.93% for the quarter. However, the total return of the S&P 500 for the month of September was -3.80% as the market cooled off after reaching an all-time high. The high point of the market came on September 2 when it closed at 3,580.84. (The S&P 500 is a market-cap-weighted index that represents the average performance of a group of 500 large capitalization stocks.)
The NASDAQ Index continued to thrive in the 3rd quarter, up 11.02% for the three-month period. But, like the S&P 500, the NASDAQ experienced a September correction, down 5.16%. Year-to-date, the index was up 24.46%. (The NASDAQ – National Association of Securities Dealers Automated Quotations – is an electronic stock exchange with more than 3,300 company listings.)
Retail sales continue recovery
With stores and restaurants reopening, retails sales have continued to pick up. According to the Department of Commerce retail report issued September 16, retail sales were up 0.6% in August from the previous month, and up 2.6% from August 2019.
Total sales for the June - August period were up 2.4% from the same period a year earlier. Automobile sales were up 0.2% from the previous month in August and up 4.5% from a year earlier. Home improvement projects during the pandemic have helped bolster the building materials and garden supplies category, with sales up 2.0% from the previous month and 15.7% from a year earlier. Food and drinking establishments have also continued to recover as customers slowly begin to return. Sales were up 4.7% for the month, but still down 15.4% from a year earlier. Department store sales continue to suffer, down 2.3% for the month and 16.9% from a year earlier. Non-store retailers (primarily online) have continued to benefit, with more consumers relying on the internet to make their purchases. Although there was no change in sales from July to August, monthly sales were up 22.4% from a year earlier.
Unemployment high but declining
The U.S. economy gained 661,000 jobs in September as businesses continued to open across the country. As a result, the unemployment rate dropped from 8.4% in August to 7.9% in September, according to the Department of Labor Employment Situation Report issued October 2. That was the fifth consecutive month that the unemployment rate has dropped, although the number of job gains in September was the lowest of the past five months.
While the trend in net job gains has been positive, the fall-out from the pandemic continues to affect the job market, with new unemployment claims averaging about 867,000 over the four-week period through September 26. That is down slightly from over one million new claims during the previous four-week period. According to the report, “notable job gains occurred in leisure and hospitality, in retail trade, in health care and social assistance, and in professional and business services. Employment in government declined over the month, mainly in state and local government education.” Average hourly earnings ticked up $0.02 in September, from $29.45 to $29.47.
Most sectors post strong quarter
Ten of the 11 sectors of the S&P 500 made gains in the 3rd quarter, led by the Consumer Discretionary sector, up 15.06%, Materials, up 13.31%, and Industrials, up 12.48%. Energy continues to lag the market, with oil prices still in the tank. The Energy sector was down 19.72% in the 3rd quarter and down 48.09% year-to-date.
The chart below shows the results of the 11 sectors for the past quarter and year-to-date:
