Weekly Market Recap – Week Ending July 3rd, 2020
What Did The Market Indexes Do?
|Dow Jones Industrial Average||+3.2%||25,827.4||-8.3% |
|NASDAQ Composite Index||+4.6%||10,207.6||+14.4% |
|S&P 500 Index||+4.1%||3,130.0||-2.1% |
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Strong Performance in Stocks
Even with a short trading week, the three major indexes all posted 3%+ gains on the week, erasing the prior weeks’ downtrend. Looking at the quarter overall, it was a beast, despite seeing major drops in March and April. In the second quarter of this year, the Dow Jones posted an 18.5% gain–reports say this is the largest since 1987. The S&P 500 reportedly saw their biggest quarterly increase since 1998, too, posting a gain of about 20.5% in the quarter.
I’ve also reported out on the difference between growth stocks and value stocks (I personally lean toward value investing), but the data is showing that growth stocks are on pace to outperform value stocks by the widest margin since 1999. Right now, that margin sits at around 33% on the year, and if the pace is kept through the end of the year, it’ll beat the prior record from the late 90s.
Some Sectors Are Winning, but Expectations Are Down Overall
Sectors like technology, energy, and consumer discretionary all generated big returns in the second quarter–posting gains of more than 30%, while consumer staples and utilities each saw gains, but both were under 10%. In addition, gold hit its highest price–about $1,800 per ounce–for the first time in nine years, going up around 13% overall this past quarter. That’s the highest gain in four years, and the price we saw last week is within around 5% of the record high set back in 2011.
All of that said, analysts are still bearish on company earnings for the second quarter, lowering their estimates by 37%, which is the largest drop in estimates we’ve ever seen (FactSet began looking at this data in 2002). We’ll start to see companies reporting on their earnings as early as late next week, and it all starts with the major banks. So we’ll see how close the analysts came to projecting a reduced quarter (despite many sectors killing it). See what I mean by things not lining up?
Unemployment Is Down, but We’re Still Unclear on the Future
The jobs report for June showed that 4.8 million jobs were added and unemployment fell to 11.1%–which is good news. The worrying part of this, though, is that the data was captured during the middle of the month, prior to the news that cases of the novel coronavirus were spiking in some states (and now across the country) toward the end of June. As states reversed guidance for “re-opening” (i.e., bars being opened), experts still aren’t sure what the impact will be for July.
On the economic front, we learned last week that the Fed is considering more economic stimulus measures, in addition to saying that short-term rates are going to remain close to zero through at least 2022. And building off the point above, the Fed expressed some concern over relaxing some of the COVID-19-related restrictions too fast. So in short – the data is good, but we’re not sure how “real” it will be, based on what happened toward the end of the month and what the Fed is saying.
Invest Your Money
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|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|