Todd’s Take on the Market
Stocks turned in another good week and have now regained most of the February/March losses. The Dow is down 8.3%, the S&P 500 is down 2.13% for the year but look at the tech-heavy NASDAQ—it is up 14.3% YTD.
It was quite the first half of the year. We saw:
- The Coronavirus wreak havoc
- Kobe Bryant die
- 40,000,000 unemployed
- George Floyd murdered
- Riots & looting
- Statues being pulled down left and right
- Murder hornets
- Hong Kong protests
- China at war w/ India
- Kim Jong Un die but not really
- Sports canceled
- Stocks pushing back to all-time highs
Look at the headlines:
“Pandemic Rages through the US, Spurring Quarantines and Mask Orders…” “Tearing through the heartland, causing record hospitalizations…” “New model predicts that it is expected to kill 180,000 Americans by October…” and “Stocks Surge!” Is it me, what am I not seeing here?
Economic data is trending more positively. Private payrolls grew by 2.369 million for the month.
New home sales surge 16.6% in the latest report and that is good news. U.S. Services PMI was on the rise in June, according to flash Markit reading and across Japan, Australia, France, Germany, the Eurozone and the UK. All broadly beat expectations. The fact that PMIs came in above expectations is a good sign that the global economy is bouncing faster than had been penciled in as-of a couple of months ago, but beyond that, there should only be tempered optimism about the outlook.
1.480 million people filed initial jobless claims for the week ended Jun 20th. 47.218 million people have filed in the last thirteen weeks. 12.3% of the US labor force was receiving unemployment insurance benefits as-of June 13th. Note: Does not include Pandemic Unemployment Assistance. So, we’re in the 14th straight week of unemployment claims decreasing, but we’re still stuck well above 1 million.
The U.S. economy shrank at a 5.0% annualized rate in Q1, unchanged from the previous estimate a month ago.
U.S. companies filed for the most bankruptcies in 7 years.
S&P 500 had its best quarter since 1998 and the NASDAQ is at all-time highs. This makes perfect sense. I have never been involved in the markets where so much could go so wrong and we keep forging higher. It’s confounding.
I hope you have a great week. I will be out of the office next week, so my next market note will be in two weeks. Stay safe everyone!
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC
