Abstract

Us stocks closed lower in September as US President Donald Trump and his wife tested positive for the coronavirus but were cured and discharged after treatment. Markets are keeping a close eye on the progress of the new fiscal stimulus package and the US presidential election. On the labor market, non-farm payrolls in the United States increased by 661000 in September, the fifth consecutive month of growth, and is expected to increase by 868000; the unemployment rate is 7.9%, which is expected to be 8.2%; and the unemployment rate is still high. the number of new non-farm payrolls was less than half of the increase in August.

Looking back in September, the S & P 500 closed down 3.9%; the Dow Jones Industrial average closed down 2.3%; and the NASDAQ closed down 5.2%. In terms of the plate, the raw material plate led the rise, while the energy plate led the decline. Us stocks suffered a correction and failed to get rid of the September curse.

1)

there is great uncertainty about the prospects for economic recovery:In September, data released by the Institute of supply Management (ISM) showed that the service sector index PMI was 57.8, the first time it has returned to expansion since February, but new export orders and import indices have fallen to varying degrees, making it difficult for the demand side to continue the upward trend. The core consumer price index (CPI) grew at an annual rate of 1.7% in September, in line with market expectations.

2)

A new round of economic stimulus bill negotiations may affect the stability of the labor market:The impact on the labor market continued, with 661000 new non-farm payrolls in September, 207000 less than market expectations of 868000 and less than half of the 1.371 million new payrolls in August. The unemployment rate was 7.9% in September, below market expectations of 8.2%. If the two parties still fail to agree on a new round of economic stimulus negotiations, the labour market will be hit again.

3)

US corporate Q3 earnings season kicks off:Judging from the expected EPS of all sectors of the S & P 500, they all rebounded to varying degrees in the third quarter, but as we had expected, the year-on-year EPS growth rate of all sectors is expected to return to full growth from the first quarter of 2021. Among them, the optional consumer, financial and information technology sectors are relatively robust, while the energy sector is more volatile.

Risk:Guard against the risks to the economy caused by repeated health events; the impact of the wave of US corporate bankruptcies on the labor market; and the impact of the US presidential election on the risk market.

The prospects for US economic recovery are still uncertain.

In September, data released by the Institute of supply Management (ISM) showed that the service sector index PMI was 57.8, the first time it has returned to expansion since February, but new export orders and import indices have fallen to varying degrees, making it difficult for the demand side to continue the upward trend.

The core consumer price index (CPI) grew at an annual rate of 1.7% in September, in line with market expectations. The US manufacturing purchasing managers' index PMI fell to 47.8 in September, still below the 50 rise and fall line, indicating that the manufacturing sector is still shrinking. Notably, the consumer confidence index continues to rise, with the final consumer confidence index rising to 80.4 in September from 74.1 last month. The arrival of the traditional shopping season will also inject a shot in the arm into the consumer industry.

Fed officials have repeatedly reiterated that the current economic recovery is faster than expected, but the outlook for recovery is still uncertain and fiscal and monetary policy support is indispensable.

Looking back in September, the S & P 500 closed down 3.9%; the Dow Jones Industrial average closed down 2.3%; and the NASDAQ closed down 5.2%. In terms of the plate, the raw material plate led the rise, while the energy plate led the decline. Us stocks suffered a correction and failed to get rid of the September curse.

Health incidents have a major impact on the labor market

As of 10.12, the number of initial jobless claims in the United States that week recorded 898000, and the market is expected to be 825000. The number of initial jobless claims has been repeated again, and the number of continuous claims is still more than 10 million. There has been a slowdown in the job market recently.

The number of new non-farm payrolls in September was 661000, less than the market expectation of 868000, and less than half of the 1.371 million increase in August. The unemployment rate was 7.9% in September, below market expectations of 8.2%, falling more than expected after August, and with November's general election approaching, coupled with repeated health events, the job market outlook is full of uncertainty.

In addition, if the two parties still fail to agree on a new round of economic stimulus negotiations, the labour market will be hit again. A new round of economic stimulus policies will directly affect the wave of bankruptcy of small and medium-sized enterprises and individuals, and the labor market will face an even worse situation.

Us company Q3 earnings season kicks off

In the second quarter, the performance of American enterprises was strongly impacted by COVID-19 's health incident, which showed a cliff decline, and the revenue and profit performance was not satisfactory. Due to factors such as the resumption of production and work and the recovery of the labor market in the third quarter, the performance of US enterprises will improve to varying degrees.

EPS growth in the S & P 500 narrowed sharply to-21.7 per cent year-on-year from-33 per cent in the previous quarter. It is undeniable that this growth has something to do with analysts' sharp reduction in their earnings per share forecasts for the third quarter, but the market still maintains some confidence in the economic recovery.

Judging from the expected EPS of all sectors of the S & P 500, they all rebounded to varying degrees in the third quarter, but as we had expected, the year-on-year EPS growth rate of all sectors is expected to return to full growth from the first quarter of 2021. Among them, the optional consumer, financial and information technology sectors are relatively robust, while the energy sector is more volatile.

Risks and opportunities

Us stocks have suffered a correction to some extent recently, with the market paying close attention to the progress of the US presidential election and a new round of fiscal stimulus negotiations. The blocking of clinical trials of vaccines by a number of pharmaceutical companies in the United States has also dealt a blow to investor sentiment to some extent. Us stock valuations are still at record highs and investors still need to be wary of the risk of a valuation correction.

With the approach of the global traditional shopping season and the recovery of consumption to varying degreesIn the short term, we believe that we can continue to focus on e-commerce giants with stable performance and value stocks with lower valuations, avoiding short-term risks and sectors with volatile valuations. Medium-and long-term configuration: online consumption (e-commerce, etc.), big data, cloud computing and other Internet stocks.

In view of the repeated impact of current health events, the US presidential election is approaching, the progress of vaccine clinical trials is blocked, and the progress of a new round of economic stimulus bill negotiations is slow.Short-term market volatility may intensify.Investors can consider long VIX volatility index to spread risk, and be cautious, rational analysis of risk to find investment opportunities.

In terms of valuation, the S & P 500 dynamic price-to-earnings ratio reflects that U.S. stocks are still at a 10-year high, with a price-to-earnings ratio of 25.47x. The S & P 500 has fallen somewhat due to the decline in U.S. stocks and technology stocks in September, but is still above the 10-year average of 16.4x.