Market Watch: Nov. 20

However, hopes faded a bit Tuesday as the grim reality of surging virus cases and lacklustre retail sales sent U.S. markets lower. The number of newly reported Covid-19 cases in the U.S. jumped on Monday to over 166,000 from a day earlier, while hospitalizations hit another high.

Meanwhile, U.S. retail sales rose in October at their slowest pace since the spring – an especially troubling fact given those numbers reflect sales before the latest prolonged spike in cases.

By Tuesday’s close, all three major U.S. indexes were in the red, while the TSX registered a small gain of 58 points.

U.S. stocks fell even further Wednesday as coronavirus cases continued to spiral out of control in much of the U.S. Also weighing on markets were Tuesday comments from Fed Chair Jerome Powell, who highlighted the uncertainty of the recovery in light of surging infections. By day’s end, the Dow was down nearly 350 points, the Nasdaq was off almost 100, and the TSX erased Tuesday’s gains, losing 58.

U.S. stocks reversed early losses Thursday to end the session slightly in the green, lifted once again by key tech names. While disappointing jobs data showed that new jobless claims in the U.S. actually increased last week to 742,000, momentum appeared to shift later in the day on renewed hopes for a coronavirus relief bill.

Dow and S&P Flat; TSX Registers Modest Gains

For the four trading days covered in this report, the Dow added just 3 points to close at 29,483, the S&P 500 lost just 3 points to settle at 3,582, while the tech-heavy Nasdaq rose 76 points to close at 11,904. In Canada, the TSX climbed 234 points to end at 16,909.

Strategy

Retail sales in Canada surprise in September as provinces introduce new public health measures

Canadian retail sales rose for the third straight month, ahead of estimates, led by new cars and food.

Sales jumped 1.1 per cent in the month, accelerating from a 0.5 per cent reading in August, and well above the consensus forecast of 0.2 per cent. Nine of the 11 subsectors were positive in the month and are above their pre-pandemic levels.

New car sales exceeded its February level by 36.9 per cent, as sales at motor vehicle dealerships increased for the fifth consecutive month. Core retail sales, which exclude autos, still rose by 1.0 per cent, bolstered by general merchandise stores and food.

The transition to online sales continued in September despite the increase in retailers expanding in-person shopping. The portion of total sales completed online rose by 0.5 per cent in the month, accounting for 5.6 per cent of total retail trade, and e-commerce sales were up 74.3 per cent year-over-year.

Regionally, Alberta rose the most, 2.5 per cent, followed by British Columbia, 1.7 per cent, and Ontario, 1.0 per cent.

Advanced October estimates from Statistics Canada suggest sales were relatively unchanged in October as cities were forced to increase restrictions implying the better than expected retail numbers are likely temporary. October’s advance reading is more in-line with the Bank of Canada’s view, which expects inflation to remain muted for an extended period of time as businesses are damaged by the pandemic and will struggle to raise prices.

Yesterday, B.C. announced additional restrictions to control the virus’s spread as case levels are at a record high. Ontario Premier Doug Ford is scheduled to talk on Nov. 20 and announce stricter measures.

The province has not yet indicated the extent of the new restrictions, as it has already banned indoor restaurant dining, movie theatres and indoor activities in the hardest-hit areas. Additional measures may include closing outdoor seating in restaurants and closure or reduced hours for shopping malls and retailers.

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Market Watch: Nov. 20

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