Market Review: Week Ending 7/10
US stocks continue to look through worsening COVID-19 news as new cases have tripled to over 60k/day from month-ago figures.1 The S&P 500 gained 1.8%, closing at 3185 while yields on 10-year US Treasury Bonds fell to as low as 0.57%, a two-month low, before ending the week at 0.63%1 as it appears that stimulus dollars are primarily boosting financial markets and not the real economy. Led again by the mega-cap Technology stocks, the NASDAQ rose over 4% as Netflix surged 14.3%, Amazon gained 10.7% and NVIDIA 9.0%.1 The NASDAQ Index is now up over 18% in 2020,1 as investor attention remains on a handful of mega-cap stocks that stand to widen their competitive moat during the COVID-19 crisis. Volatility in stocks remains high, with the VIX measure hovering above 301 most of the week, as markets continue to anticipate the economic impact of the surge of virus cases as most states have now rolled back plans for reopening to some degree. The upcoming Q2 earnings seasons could lead to additional volatility, as S&P 500 companies are expected to report a 44% decline in Y/Y earnings, the largest annual decrease since the financial crisis.1 Investors will also be focused on the potential for an “income cliff” should the funding for the COVID-related federal unemployment benefits ($600 weekly) be allowed to expire on July 31st. Through the close Friday, year to date results for the major indices are as follows: S&P 500 -0.4%, Russell 2000 -14.1%, MSCI EAFE –9.7% and Bloomberg Barclays Aggregate Bond 6.7%.2
Want to know what we're watching in the week ahead? Check out the FULL REPORT in attachment section below.
Chad Roope, CFA®
Paul Danes, CFA®
2-Morningstar Direct 7/12/20