U.S. major equity averages finished July with solid gains and posted their fourth straight positive month. The S&P 500 gained 5.64% while the Dow and the Nasdaq Composite rose 2.51% and 6.85%, respectively.1 The impressive July performance was backed by continuing fiscal and Federal Reserve stimulus programs, better-than-expected earnings, and meaningful progress toward developing COVID-19 vaccines.
Yet many densely populated states began experiencing sizable increases in daily infection rates, prompting numerous state-ordered business re-closures. This in turn led to an increase in jobless claims and a pullback in consumer confidence. Gross Domestic Product, or GDP, plummeted to its worst quarterly reading on record, falling 32.9% in the second quarter. As shocking as this seems, the eye-popping number was anticipated by investors and economists alike.
The second quarter is already old news and investors are looking for signs of what is to come in the third quarter and beyond. While COVID-19 has taken a larger toll than anyone may have anticipated back in February, the markets have been able to look past the current economic and virus issues and focus on the recovery. Stock investors have been very optimistic about future growth brought on by the stimulus packages, but for how long can this continue?
August and September have historically been the weakest months for stocks so it would not be surprising to see the markets soften. Should markets become volatile in the weeks ahead, investors may want to remind themselves of the seasonal trends that may be at work.
Your well-being is of foremost importance. We will continue to monitor the economic and market implications of the COVID-19 pandemic and make accessible updates as soon as they are available.
Remember, I am here to help you and your family answer any questions that you may have. As always, feel free to contact me directly at 330-908-1087 or you can e-mail me as well.
Stay healthy, stay safe and stay positive!
1Morningstar Direct (all equity performance percentages are total return based, which include reinvested dividends)