Market Review: Week Ending 7/17/2020
While the coronavirus rages on (11 new records have been set for new daily cases in July and 75k was hit last week1) investors remain focused on the impact of easy money and the potential for a vaccine, driving the S&P 500 up 1.2% last week to 3224.1 This occurred despite the pullbacks of many popular Covid-19 Technology stocks (Netflix (-10.2%), Zoom Technologies (-10.6%) and Amazon (-7.4) as the tech-heavy NASDAQ Index fell 1.1% last week.1 Moderna jumped 17% after the company released data showing its potential coronavirus vaccine producing a robust immune response in all 45 patients in its human trial.1 This boosted the “reopening” trade that favored Materials (+5.7%) and Industrials (+4.6%), and led to some profit-taking in the narrow group of Technology leaders.1 Reopening stocks surged despite news of increasing rollbacks of plans for reopening by many states, including the latest in California. Healthcare stocks (+5.1%) also rose on the back of the Moderna news, showing the importance investors are placing on hopes for a vaccine.1 Investors will soon worry about 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.1 Into August, plans for back-to-school in an increasingly dangerous healthcare environment provide another hurdle for stocks that seemingly discount an accelerating economic climate in the back half of the year. The upcoming week will be the heaviest for Q2 corporate earnings reports, where expectations coming in are low, with the S&P 500 companies expected to show a 44% y/y decline in Q2.1 Through the close Friday, year to date results for the major indices are as follows: S&P 500 0.9%, Russell 2000 -11.0%, MSCI EAFE –7.7% and Bloomberg Barclays Aggregate Bond 7.0%.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®
1-Morningstar Direct 7/20/20