Wealth Management Market Update

Investment Update

Updated October 23, 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 and how we look ahead from here.

Awaiting the Election

Markets have been treading water awaiting the upcoming election. The S&P 500 is currently hovering around 3,430, which is essentially where it was two weeks ago. Based on a Vanguard analysis, the impact of presidential election cycles on equity market returns has historically proven to be negligible. While you may have concerns about the upcoming election, it should not sway you from following the financial plan crafted for your specific long-term goals.

COVID-19 Cases Rising

The number of COVID-19 cases is rising, with the seven-day moving average up to 58,000, about 35 percent higher than two weeks ago. The Midwest is seeing the largest increases in cases; however rates are increasing in all U.S. regions. Hospitalizations and deaths are up 14 percent and 8 percent, respectively, over the last two weeks. Thankfully, these increases in hospitalizations and mortalities are still less than the peak earlier this year, likely due to better treatments and procedures involving the most vulnerable. Cases in Europe have been spiking even faster, with the continent now having a higher per capita case level than the U.S.

There is a fear that cases will continue to rise significantly as we enter the normal cold and flu season, surpassing summertime highs. It appears there is no appetite for the widespread economic shutdowns that were implemented in the spring to try and contain the spread. We continue to see positive news on the COVID-19 vaccine and treatment front. Widely administered vaccines and better treatments are the single most important factor in returning to our pre-COVID-19 way of life.

Positive Employment Data

Weekly jobless claims beat expectations Thursday, coming in at 787,000. This number has begun to fall again after stagnating the last several weeks, although it remains significantly higher than before the virus. Continuing jobless claims had another sharp decrease this week, falling by 1 million claims to 8.4 million. Continuing claims are down more than 16 million from their April highs and 4 million over the last four weeks. This provides confidence that the labor market is continuing to heal.

September retail sales data also came in stronger than expected. Nominal retail sales data has recovered from the sharp spring drop off and is making new highs. There had been a fear that retail sales growth may slow given the lack of a fourth stimulus package. However, this has not yet materialized.

Third-Quarter GDP to be Announced in Late October

U.S. GDP fell 5 percent in the first quarter and was followed by a historically bad 31 percent drop in the second. The result was one of the sharpest and deepest recessions in U.S. history.  However, it was actually one of the shortest as well. When third-quarter GDP is announced next week, there may be a rebound of approximately 30 percent. Further, fourth-quarter GDP could be up another 5 percent, leaving full-year 2020 GDP down roughly 3 percent.

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.