The stock market retained a strong performance despite a rapidly increasing number of more infected by the coronavirus in the US as well as growing concerns over up coming Presidential elections. S&P 500 and Nasdaq posted modest gains while the Dow fell at the close of Friday’s session. The S&P 500 health-care sector ETF rose to a record high.
The S&P 500 and Dow each posted weekly advances for a third straight week. The S&P 500’s weekly advanced totalled about 1.3%, while the Dow rose 2.3%. The Nasdaq declined by about 1% over last week.
According to one of Wall Street’s top strategists – Ally Invest’s Lindsey Bell- the underlying market signals could mean anything for investors. As 10-year Treasury Notes have trouble getting above 1%, gold recently broke the barrier of $1,800 an ounce amid elevated volatility levels.
While investors are drawn to low-risk products like government bonds and gold, it is too soon to talk about an economic rebound as of yet.
“June economic data has improved,” she said. “The question though is where does that economic data go from here? Are we plateauing or could we potentially see a slowdown and not grow?”
She suggests the market is at a critical crossroad — particularly as the presidential election begins to dominate the headlines.
Right now, we are in the middle of second-quarter earnings season where a range of companies are posting promising performance results, while others are falling short of analysts’ projections.
For months the most highly-valued, technology and e-commerce companies have marshalled a nearly unceasing rally during a public-health crisis that has exacted tremendous pain on the domestic and global economy.
The conclusion of last week’s trade on Friday highlighted an easing of investor appetite for mega-cap tech names, raising questions about the effect of slowing and the possibility of a reversal of reopening plans on economically sensitive sectors, like manufacturers, energy companies, financials and industrials.
There are some positive indicators in the market including the Federal Reserve’s unrelenting policy support for stocks and a high probability the government will pass a new stimulus package to help struggling Americans.
This isn’t the first time the markets have seen glimmers of rotation out of tech and growth names. The stock market rally up to this point has been supported by companies that have been considered more resilient in this uncertain economic climate. But with no end in sight of the public health crisis in combination with the upcoming election drama, investors best prepare for any situation that could occur in November.