8/16/2020: Weekly Wrap-up and What to Expect

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Stock markets reacted negatively to Senator Kamala Harris' announcement as Biden's vice president running mate; however, markets rebounded the next day.


Market Movers

The S&P 500 climbed ~0.5% last week at a consistent pace besides experiencing a tremendous ~1.3% dip late Tuesday afternoon upon the announcement of Senator Kamala Harris as Biden’s vice president running mate. There’s been good news in regards to COVID cases and unemployment, but several states are still struggling to keep case-count low. There’s a lot going on, but we’ll break it down for you so you know what to expect in the near future. Here are the details:

  1. 📈COVID-related deaths plateaued, and new daily cases and current hospitalizations continue to decrease. Over the course of the week, the U.S. saw overall decreases in the number of daily COVID cases as well as those currently hospitalized for COVID. However, daily deaths due to COVID remain flat as it is a lagging indicator to hospitalizations. We expect deaths to start declining significantly over the next week, driving positive sentiment 

  2. 📈 Weekly unemployment claims dropped under 1M for the first time since March. Last week, we saw unemployment claims drop to 963K, which is the first time this metric has been under 1M since March. This is a good indication that Americans are able to find jobs despite a difficult market. This recent unemployment claims report supports the decrease in unemployment rate we saw in July. We hope to continue seeing this number drop over time, which may inversely correlate with stock market performance.

  3. 📉Currently 26 states are in the reopening process, while 14 states are paused and 10 states are reversing. The number of states reopening decreased by 1 from last week as Hawaii began reversing its re-opening plans given record high COVID cases. Overall, states will not reopen at the same rate of declining overall COVID cases since there are unique considerations for each state. However, we remain optimistic that over the next 1 - 2 months, we will begin to see a significant influx of states reopen as we better control COVID cases.

  4. 📉 The second stimulus package has hit a barrier as Democrats and Republicans cannot align on total funding and where the funds go. The much anticipated stimulus package hit a roadblock when the Democrat-led House proposed a $3T stimulus package while the Republican-led Senate quickly blocked it. Cost was certainly the biggest sticking point, but there were significant disagreements on the amount that should be funded at a federal level vs. state level. Now, most do not anticipate the second stimulus package to pass until mid-September when the House and Senate reconvenes.

WX Capital remains positive on near-term stock performance based on news released to-date. The downward trend of COVID cases, hospitalizations and hopefully deaths is key for a recovery economy stricken by a virus. Furthermore, we expect states to reopen fully as cases decline and states implement more strict requirements for individuals going out to eat, to beaches, etc. We are keeping a close eye on developments with reopenings and the second stimulus package as those will likely be big drivers in economic recovery and stock performance. As always, please don't hesitate to reach out with questions!


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