Todd’s Take on the Market
Stocks took all of the news last week in stride (as I have suggested it might) and had the best week since forever. The Dow posted its seventh-best weekly performance, rallying 12.7%. The S&P 500 had its biggest one-week gain since 1974, jumping 12.1%. Wall Street’s strong weekly gains came in large part because of an apparent improvement in the U.S. coronavirus outlook along with massive stimulus from the Federal Reserve.
We are still on pace for one of the worst years since 2008—but as I like to say, “it’s not the opening prices that count, it’s the closing prices.” We have a long time until December.
Weekly unemployment filings totaled over 6.6 million claims, pushing the last 3 weeks to 17,000,000—that’s a big number. The fact that this many people are applying for unemployment, scares me to death for how that “trickles” through the economy over the weeks/months to come.
Let us recall, I mentioned what I would be looking for, which wasn’t the news but the reaction to the news—and what we are seeing is that the reaction is pushing stocks higher. I have two schools of thought on this at this juncture, and I am not sure which is going to play out. And if it makes you feel any better, no one on Wall Street or any other street does either—it is unprecedented.
- Stocks turn sharply higher regardless of the news and go back to all-time highs.
- Stocks turn sharply lower after we start getting a clearer picture of what “state” the economy is in and the outlook for how companies are impacted.
Maybe it is a combination of them both? Stay tuned.
David Tepper, the owner of the Carolina Panthers and an enormously successful hedge fund manager, said in a statement recently that “I do not understand this rally because the companies I am talking to are going broke”.
Having shared those thoughts, you know that I am here to keep you posted and I urge you that if you have any questions, comments or concerns to please reach out to us. We are monitoring the phone banks and will be following up, as soon as possible.
Stay safe and healthy!
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC
