Busy Week Ahead With The Economy, Earnings, And The Election In Focus

Plus 5 New Strong Buys for Today [Kevin Matras] Profit from the Pros By Kevin Matras Executive Vice President [Zacks Investment Research] Busy Week Ahead With The Economy, Earnings, And The Election In Focus Image: Bigstock Stocks closed lower on Friday and lower for the week. Friday's pullback was led by big tech. In spite of beats by Amazon, Facebook, and Apple on Thursday after the close, they all traded lower on Friday, dragging down the markets. But I wouldn't worry too much about big tech. Nor would I worry too much about the market. I would chalk last week up to profit taking and position squaring with the catalysts being the rise in virus cases, and uncertainty ahead of Tuesday's election. As I was mentioning all last week, with Europe grappling with an increase in Covid cases and talk of more shutdowns, that fear spooked U.S. investors given the rise in cases here in the states as another shutdown would hamper growth. Fortunately, our economy has seen the fastest economic rebound in history. And because our economy was so strong going into the pandemic, it's allowed us to strongly bounce back. That was underscored by last week's Q3 GDP report which showed a 33.1% growth rate which was the largest in history. And with expectations for more growth in Q4 (especially if Congress can pass another stimulus bill after the election), not to mention expectations for all of 2021 to grow at the fastest pace in 38 years, it looks like there's a lot more upside to go for both the economy and stocks. Election uncertainty remains a factor as well. Even though the election is tomorrow, we could see uncertainty persist for the rest of the week, or longer if it's close, given the additional time to count mail-in ballots. But we could also very well see a winner declared tomorrow night, and everybody's worst fears over a contested election would vanish in an instant. We shall see. In the meantime, earnings season continues to roll on with 1,884 companies set to report this week, and another 1,241 next week. Since stocks typically go up during earnings season, it's nice to have that historically positive catalyst in play. And while we're on the topic of positives, Friday's Chicago Purchasing Managers Index came in better than expected at 61.1 vs. estimates for 58.0. And Consumer Sentiment increased to 81.8 from last month's 81.2 and views for the same. That was a 6-month high. Always nice to see a strong reading here since roughly 70% of our GDP comes from consumer spending. We may have a few crazy days with tomorrow's election. Or not. Either way, the economy is on a strong path of recovery. And as the economy continues to improve, that should be good news for stocks. 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