Last week marked the start of a possible correction in technology shares. At one point, it looked as if Friday could morph into a second consecutive day of heavy losses. However, by the close, the S&P 500 was only down 2.31% for the week.
Better than expected labour market numbers helped. The big drop in initial jobless claims and the markedly lower U3 / U6 unemployment rates were positive surprises. On the household survey, employment rebounded 3.765m.
Permanent job losses are rising and are a concern. But the recovery in the Johnson Redbook survey showed a very clear appetite among Americans for ‘business as usual’. In five weeks, the annual rate of change in retail sales has jumped from -8.7% to 4.6%
As with the FAANGs, Tesla may look over-bought. Day-time traders may be flushed out in the run-up to the US election, particularly if Covid-19 infections keep rising. But the big global trends favour the large winners in technology. The US is dominant. An autumn correction should be viewed as a buying opportunity.
Summary
• Encouraging labour market data
• Retail sales jump, again
• Poor trade numbers, weak dollar?
