Weekly Market Recap – Week Ending June 26th, 2020
What Did The Market Indexes Do?
|Dow Jones Industrial Average||-3.3%||25,015.6||-11.3%
|NASDAQ Composite Index||-1.9%||9,757.2||+9.3%
|S&P 500 Index||-2.9%||3,009.1||-6.0%
Deal of the Day: Chase is now offering a $200 cash bonus when opening a Total Checking Account. No minimum deposit and all deposits are FDIC insured up to the $250,000 per depositor maximum.
The market went backwards this week, with some major indexes (like the Dow) falling more than 3%. If you recall, that’s about the same gain we saw the week prior. Friday saw the largest downward trend, primarily on the news about containing the spread of COVID-19 (or the lack thereof in many states). Additionally, the Fed put (temporary) restrictions in place that would pause dividend payments from some of our largest financial institutions.
This is somewhat surprising news. Just a few weeks ago, it seemed like the economy was trending back upward, as was the market, but some states are having to go backward on the restrictions they just lifted a month ago. The market reacted as it should, but as we’ve seen over the past few months, there isn’t a strong correlation between the coronavirus and the stock market (meaning, it’s been completely unpredictable). Stay tuned this week to see how the market reacts.
COVID-19 Cases Skyrocket
In case you missed it, late last week the news came out that there was a massive uptick in cases of COVID-19 across the country–which ultimately impacted the global economy and our stock market. Florida and Texas had some of the largest increases in cases and had to put restrictions that were recently lifted back in place to try and flatten the curve. The number of cases per day across the country went up to 40,000–which currently puts the United States on top for the most confirmed cases.
Most Companies Are Being Cautious
Earnings season is yet again upon us, but many companies are hesitant to provide any type of financial guidance (i.e., earnings) on their results in the second quarter. By the end of the week last week, there were only 49 companies in the S&P 500 that issued EPS guidance. According to FactSet (see link above), that’s about 54% lower than the five-year average of how many companies typically report. In addition, FactSet stated that “the estimated earnings decline for the S&P 500 is -43.9%. If -43.9% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings reported by the index since Q4 2008 (-69.1%).”
Oil Comes Back (Just a Bit)
After a recent rally on oil prices, the price of crude oil dropped to around $38 per barrel by the end of the week last week. Experts believe this has to do with not only the uptick in confirmed COVID-19 cases across the country, but increasing inventory of crude oil. If you remember, a couple of months ago there were agreements in place amongst the world’s largest oil producers to halt the production and distribution of crude oil to help stabilize pricing.
The Global Economy is Shrinking More Than Expected
According to the IMF (International Monetary Fund), the global economy may shrink approximately 4.9% in 2020. Back in April, the IMF predicted a 3% decline, so this is a shift in their projections. Despite an increase in cases (which certainly factors in), the IMF noted the fact that workplaces are putting in restrictions or not fully back to their normal level of production, as well as social distancing guidelines, are continuing to pressure the global economy.
Invest Your Money
Tired of trying to time the market? Let a robo advisor do the work for you. Below is a list of the best robo advisors and a brief description on which type of investor each one is best for.
|Ally Invest||Portfolio diversification|
|Wealthfront||First time investors|
|Personal Capital||Large investors|
|Acorns||Students and young investors|
|M1 Finance||Customizing your portfolio|
|Wealthsimple||Unique investment options like SRI|
|Vanguard Personal Advisor Services||High net worth, buy and hold investors|