29 September 2020
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Weekly Market Update: Stocks Power Higher, While the Dow Makes Changes
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THE WEEK ON WALL STREET 

Stocks advanced relentlessly last week on positive COVID-19 developments, encouraging economic data, and a supportive policy shift in the Fed’s approach to its target inflation rate. 

The Dow Jones Industrial Average increased by 2.59%, while the Standard & Poor’s 500 jumped 3.26%. The Nasdaq Composite index leaped 3.39% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 1.19%.1-3 


STOCKS POWER HIGHER 

Investors pushed stock prices higher all week as hopeful news came with each new day, from the announcement of a potential treatment for COVID-19 to news that U.S. and China negotiators had met by video conference. Despite another high new jobless claims number, other economic data released during the week indicated a continuing economic recovery, further supporting investor enthusiasm for stocks.4 

The Fed’s announcement of a shift in its inflation policy, which suggested that rates are likely to remain low for a long time, helped push the market higher. The momentum carried over into Friday, leaving the S&P 500 and NASDAQ Composite at new record highs and the Dow Jones in positive year-to-date territory.5   


CHANGES IN THE DOW INDUSTRIALS  

It was announced last week that the Dow Jones Industrial Average will be undergoing some changes. Starting Monday, August 31, Salesforce.com, Amgen, and Honeywell International will be added to the 30 stocks in the Dow Industrials and Exxon Mobil, Pfizer, and Raytheon Technologies will be removed.6  

In part, these changes were prompted by Dow-component Apple, which plans a four-to-one stock split on Monday, August 31. The Dow Jones Industrial Average is a price-weighted index, and Apple’s split reduces the impact of technology on the index. The new changes are an attempt to mitigate that issue.7 

Market Update 9-2-20 
CITATIONS:
1. The Wall Street Journal, August 28, 2020
2. The Wall Street Journal, August 28, 2020 
3. The Wall Street Journal, August 28, 2020 
4. CNBC.com, August 27, 2020
5. CNBC.com, August 27, 2020
6. The Wall Street Journal, August 24, 2020
7. CNBC, August 20, 2020

CHART CITATIONS:
The Wall Street Journal, August 28, 2020
The Wall Street Journal, August 28, 2020
treasury.gov, August 28, 2020
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