Markets at New Highs: Key Numbers from September 2020

U.S. Markets Hit New Highs as Manufacturing Expands and Construction Spending Remains Strong

Market Performance Overview

NASDAQ and the S&P 500 have reached new highs as U.S. manufacturing expands and construction spending remains strong.

For five consecutive months, markets have shown positive momentum leading up to August. Investors are relieved as global equity markets continued to advance, pushing two major U.S. equity indices to new highs. Markets have recorded five straight positive months:

+7.6% – The DJIA finished August

+7.0% – The S&P 500 finished August

+9.7% – NASDAQ finished August

In August, the S&P 500 surpassed its pre-COVID level and later reached new highs, along with the NASDAQ.

• The DJIA recorded its best August since 1984.

• The S&P 500 recorded its best August since 1986.

• NASDAQ recorded its best August since 2000.

Over the past five months, the S&P 500 has surged 35.4%—its strongest five-month performance since October 1938.

U.S. Manufacturing Continues to Expand

Each month, IHS Markit releases the U.S. Manufacturing PMI, based on responses from over 800 purchasing managers. The survey covers:

• New orders

• Output

• Employment

• Supplier delivery times

• Stock of purchases

Manufacturing accounts for 11.4% of total economic output and employs 8.5% of the U.S. workforce, making this report a key economic indicator.

On September 1st, IHS Markit reported:

"Fastest manufacturing expansion since January 2019."

Their statement continued:

"August data signaled a solid improvement in operating conditions across the U.S. manufacturing sector, with overall growth accelerating to the strongest level since early 2019."

Construction Spending Remains Strong

Construction spending is a key economic indicator, reflecting activity from individuals, businesses, and government investments. Construction projects typically require significant financial confidence to justify costs.

On September 3rd, the following was reported:

• Total construction spending (July 2020): +0.1% from June, -0.1% from July 2019

• Total construction spending (first seven months of 2020): $792.6 billion, +4.0% from 2019

• Private construction spending: +0.6%

• Residential construction spending: +2.1%

• Nonresidential construction spending: -1.0%

• Public construction spending: -1.3%

Unemployment Claims Overview

Data for the Week of July 30th:

• Initial claims: 881K (down from 1M)

• PUA claims: 760K (up from 608K)

• Continuing claims: 29.2M (up from 27M) → Major concern

Relative Growth Consideration

While these figures appear strong, they should be viewed in context. Any growth will naturally look significant compared to the sharp downturn in March and April. Evaluating these numbers on a relative basis provides a more accurate perspective.

Sources: census.gov; markiteconomics.com