Weekly Market Recap

Week ended October 23

Market-moving news

Momentum shift

A three-week string of gains ended as the major stock indexes slipped around 1% entering the busiest stretch of what’s so far been a strong quarterly earnings season. Stocks couldn’t recover from a Monday decline fueled by a setback in congressional negotiations over a coronavirus relief package.

Yields surge

The yield of the 10-year U.S. Treasury bond climbed on Friday for a seventh straight trading day to an intraday peak of 0.87%, the highest level in more than four months. As recently as early August, the benchmark 10-year yield was as low as 0.52%.

Delayed relief

It was another on-again, off-again week on prospects for further congressional aid to deal with the coronavirus’ economic impact. The uncertainty extended into Friday, when a top White House economist said talks in Congress appeared to have stalled, sparking concern that another round of aid may not be approved before the November 3 election.

China's comeback

China’s government reported that its economy grew at a 4.9% annual rate in the third quarter, extending its recovery from the pandemic. The quarterly gain for the world’s second-largest economy was faster than the 3.2% rate of increase in the second quarter, when other major economies were suffering steep GDP declines.

Regaining strength

A monthly indicator of U.S. economic activity signaled the fastest rate of expansion in 20 months for both the services and manufacturing segments of the economy. However, the survey data from the IHS Markit Purchasing Managers’ Index also showed that companies acted cautiously with coronavirus still spreading and the November 3 election creating further uncertainty.

Europe's volatility

It was a volatile week for European stocks. While strong earnings results from banks and automakers lifted a European index on Friday, stocks tumbled earlier in the week amid worries about the economic impact of surging coronavirus cases.

Oil loses traction

U.S. crude oil prices slipped back below the $40 per barrel level, recording the first weekly decline in three weeks. Rising coronavirus cases and increasing oil output in Libya were among the factors that weighed on prices.

GDP flip-flop?

Thursday’s release of the government’s initial estimate of third-quarter U.S. economic growth is expected to be the most closely watched report of the week, as it could produce a record-breaking growth figure for a single quarter. In this year’s second quarter, GDP plunged 31.4% amid the pandemic. For the third quarter, economists are expecting a sharp reversal, with most forecasting growth of around 30.0%.

The week ahead: October 26-30

Monday

New home sales, U.S. Census Bureau

Tuesday

S&P/Case-Shiller 20-City Composite Home Price Index
Consumer Confidence Index, The Conference Board
Durable goods orders, U.S. Census Bureau

Wednesday

No major reports scheduled

Thursday

Third-quarter GDP, advance estimate, U.S. Bureau of Economic Analysis
Weekly unemployment claims, U.S. Department of Labor
Pending home sales, National Association of Realtors

Friday

University of Michigan Index of Consumer Sentiment
Personal income and consumer spending, U.S. Bureau of Economic Analysis

Unless otherwise noted, all data is from FactSet.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States. It is not possible to invest directly in an index.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (bps). One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

Investment returns

Equities

U.S. equity size and style total returns as of 10/23/20 (%)

1 week YTD

1 week
0.2	-0.5	-1.2	Large
1.2	0.5	-0.7	Mid
1.9	0.4	-0.9	Small
Value	Core	Growth

YTD
-7.7	10.1	27.6	Large
-6.8	4.1	21.0	Mid
-13.0	-0.6	11.1	Small
Value	Core	Growth

Index/market total returns as of 10/23/20 (%)

Close Week YTD

	Close	Week	YTD
Dow Jones Industrial Average	28,335.6	-0.9	1.2
NASDAQ Composite Index	11,548.3	-1.1	29.6
S&P 500 Index	3,465.4	-0.5	8.9
MSCI EAFE Index	1,884.3	0.1	-5.2
Cboe Volatility Index	27.6	0.7	100.0

International/developed (%)

1 week YTD

	1 week	YTD
EAFE	0.1	-5.2
Europe	-0.3	-7.1
France	0.6	-10.2
Germany	-1.3	0.9
Italy	0.6	-14.7
Japan	1.0	0.5
Spain	1.6	-22.4
Switzerland	-0.8	3.9
U.K.	0.1	-22.9

Emerging markets (%)

1 week YTD

	1 week	YTD
EM	1.1	4.2
Brazil	3.4	-36.3
China	0.4	23.7
India	0.8	0.1
Indonesia	0.8	-24.0
Korea	2.1	10.3
Mexico	3.8	-18.2
Russia	3.0	-27.3
Taiwan	1.3	20.2

S&P 500 sectors (%)

1 week YTD

	1 week	YTD
S&P 500 Index	-0.5	8.9
Communication services	2.1	14.0
Consumer discretionary	-0.6	27.7
Consumer staples	-1.3	6.3
Energy	0.5	-47.5
Financials	1.0	-16.3
Healthcare	-0.1	7.3
Industrials	-0.5	1.2
Information tech	-2.2	30.6
Materials	-0.4	9.3
Real estate	-1.3	-5.9
Utilities	1.2	2.8

Fixed income, currencies, and commodities

U.S. fixed-income style total returns as of 10/23/20 (%)

1 week YTD

1 week
0.0	-0.2	-2.0	High
0.0	-0.1	-1.0	Med	QUALITY
0.2	0.2	0.4	Low
Ltd	Int	Long
INTEREST-RATE SENSITIVITY

YTD
1.8	5.6	17.2	High
2.9	5.0	6.8	Med	QUALITY
-0.4	1.3	14.5	Low
Ltd	Int	Long
INTEREST-RATE SENSITIVITY

U.S. Treasury bond yields as of 10/23/20 (%)

END OF WEEK PRIOR YEAR END YTD CHANGE (BPS)

	END OF WEEK	PRIOR YEAR END	YTD CHANGE (BPS)
2 Yr	0.16	1.58	-142
10 Yr	0.84	1.92	-108
30 Yr	1.64	2.39	-75
2-10 spread	0.68	0.34	+34
10-30 spread	0.80	0.47	+33

U.S. bond sector total returns (%)

1 week YTD

	1 week	YTD
Aggregate	-0.4	6.4
Bank loans	0.1	-1.4
Convertible	-0.3	28.1
Corporate	-0.4	7.3
High yield	0.2	1.3
MBS	-0.1	3.5
Municipal	-0.1	2.9
Preferreds	0.4	3.9
TIPS	-0.4	8.9
Treasury	-0.6	7.8

Global bond total returns (%)

1 week YTD

	1 week	YTD
EM Local	0.9	-4.6
EMD USD	-1.1	0.0
Global Agg	0.1	6.3
Global Agg Ex-U.S.	0.3	6.0
Multiverse	0.1	5.9

Commodities (%)

1 week YTD

	1 week	YTD
BBG Com Ind	0.2	-8.7
Oil (WTI)	-3.1	-59.0
Gold	-0.1	22.0

Currencies (USD) (%)

1 week YTD

	1 week	YTD
EM FX	0.8	-5.6
AUD	0.3	1.0
CAD	0.3	-1.4
CHF	0.9	6.8
EUR	1.0	5.4
GBP	0.9	-1.5
JPY	0.6	3.7

U.S. economy

GDP

Jobs

Inflation

Ex-U.S.

Regions/countries

	GDP Growth (%) annualized	Inflation Rate (%) CPI	Unemployment Rate (%)	10-Year Government Bond (%)	Sovereign Credit Rating
Eurozone	-14.7	-0.3	8.1	_	_
China	4.9	1.7	5.4	3.27	A+
Germany	-11.3	-0.2	4.4	-0.57	AAA
Japan	-9.9	0	3.0	0.04	A+
U.K.	-21.5	0.5	4.5	0.27	AA

GDP Growth (%) annualized
Eurozone	-14.7
China	4.9
Germany	-11.3
Japan	-9.9
U.K.	-21.5

Inflation Rate (%) CPI
Eurozone	-0.3
China	1.7
Germany	-0.2
Japan	0
U.K.	0.5

Unemployment Rate (%)
Eurozone	8.1
China	5.4
Germany	4.4
Japan	3.0
U.K.	4.5

10-Year Government Bond (%)
Eurozone	_
China	3.27
Germany	-0.57
Japan	0.04
U.K.	0.27

Sovereign Credit Rating
Eurozone	_
China	A+
Germany	AAA
Japan	A+
U.K.	AA

Fund industry overview

Total net flows: open-end funds and ETFs as of 9/30/20 ($B)

as tracked by ISS Market Intelligence SIMFUND

MONTH 12 Month ASSETS

	MONTH	12 Month	ASSETS
U.S. Equity	-22.8	-248.0	9,299.4
Sector Equity	-6.6	6.9	957.1
Allocation	-6.0	-76.9	1,247.3
International Equity	-22.9	-68.0	3,235.6
Alternative	2.7	7.1	188.2
Commodities	1.2	39.1	166.9
Taxable Bond	45.5	379.1	4,758.3
Municipal Bond	7.2	57.5	894.7
Total all long-term funds	-3.0	67.0	20,759.9

Leading Morningstar fund categories by monthly net flows as of 9/30/20 ($B)

	MONTH	12 Month	ASSETS
Intermediate Core Bond	14.8	111.2	1,114.2
Short-Term Bond	10.0	57.0	498.0
Intermediate Core-Plus Bond	9.9	54.2	782.8
Ultrashort Bond	6.1	35.1	299.1
Muni National Short	3.3	18.6	157.5

Lagging Morningstar fund categories by monthly net flows as of 9/30/20 ($B)

	MONTH	12 Month	ASSETS
Foreign Large Blend	-19.2	0.9	1,162.7
Large Growth	-11.4	-67.8	2,224.9
High Yield Bond	-6.6	44.4	344.1
Small Blend	-3.2	-12.4	352.7
Large Value	-2.8	-34.9	1,087.8

Unless otherwise noted, all data is from FactSet.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly from the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (bps). One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global GDP, and over 75% of global trade.

Capital market performance report

Detailed weekly data on equities and fixed income—factors, fundamentals, styles/sizes, sectors/industries/stocks

DOWNLOAD THE LATEST REPORT

Latest viewpoints All viewpoints All viewpoints

October 21, 2020

Understanding how monetary and fiscal policies can work together

John Hancock Investment Management

While the U.S. monetary and fiscal policy responses to the pandemic have been massive, further efforts on the fiscal side have stalled. We explore the differences between the two.

October 16, 2020

Why mid caps may lead the way out of recession

Steven L. Pollack, CFA, Portfolio Manager Boston Partners

Mid-cap value stocks may provide some diversification and opportunity for investors who want to participate in the U.S. postrecession recovery.

October 09, 2020

Target-date funds: strategic and active management

John Hancock Investment Management

While strategic management primarily dictates the glide-path process behind target-date funds, there are opportunities within market cycles to use active management.

From Twitter MORE TWEETS