Wealth Management Market Update

Investment Update

Updated July 31, 2020

Our investment team remains committed to helping you achieve your goals. We are constantly monitoring and evaluating the markets to provide you the most relevant financial information related to COVID-19 and how we look ahead from here.

Information is changing quickly, and, as always, we are available for personal consultations. This page is another resource, and we will be updating it regularly with information and insights.

Why are tech stocks doing so well and is there concern?

Large cap tech stocks showed why they have been the market leaders throughout the COVID-19 crisis. Amazon delivered blowout results, even with massive investments in their supply chain and improved worker safety. They now employ 1 million workers, 25 percent more than they did last year. Apple and Facebook delivered stellar results, surpassing analyst estimates. Apple also announced a four-for-one stock split. Google announced its first decline in quarterly revenue in its history due to lower advertising revenues. However, the company did beat analyst expectations. 

The stunning success of these companies throughout the crisis has raised concerns about their overall size when compared to the rest of the economy. Tech CEOs were questioned this week by the House Judiciary Committee investigating antitrust issues. Concern will likely linger since economic changes accelerated by the pandemic may continue to act as a tailwind for these companies.

What is the latest economic data telling us?

U.S. Gross Domestic Product (GDP) — the value of all goods and services produced by the economy — fell 32.9 percent in the second quarter. This was the steepest drop in the 70-year history of the economic statistic. GDP is expected to rebound in the third and fourth quarters of this year. Estimates for the full year 2020 GDP are in the -5 percent range.

What is happening with additional stimulus measures?

Congress is negotiating another round of stimulus. Projections are currently for a package around $1 trillion. The European Union recently passed a historic 750 billion euro ($857 billion) stimulus agreement. The deal is notable since the EU will raise cash by selling bonds collectively for the first time. The funds will be distributed as grants that do not have to be repaid, instead of loans that would significantly increase national debts. We continue to see massive amounts of stimulus being added here and abroad. This is a clear positive for financial markets.

Why are unemployment numbers going up?

Both initial and continuing jobless claims rose this week. This is likely an effect of the current rise in COVID-19 cases in many states. The spike has led to delays in economic reopenings, and reversals in some instances. However, on a positive note, it appears the current wave is receding. The seven-day average in new cases is down nearly 8 percent, as reported by Evercore-ISI. The largest hot spots, Arizona, California, Florida and Texas, are all seeing their number of new cases drop, with their hospitalization rates flat or decreasing as well.

What should I be doing with my investments?

We encourage you to pay attention to the latest developments, but not to lose sight of your long-term investment strategy. Reach out to our investment team to discuss your options and reaffirm your timeline and goals. Call our investment team at (518) 415-4401.