8/23/2020: Weekly Wrap-up and What to Expect

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Market Movers

The S&P 500 climbed ~0.5% last week as COVID cases continue to drop and COVID deaths are starting to decrease after a long plateau. Furthermore, Biden took a more central approach at the Democratic National Convention. There’s a lot going on, but we’ll break it down for you. Here are the details:

  1. 📈COVID-related deaths are starting to decrease while new daily cases and current hospitalizations are decreasing at a steady rate. We saw the first signs of COVID deaths declining just this week. The number of deaths per day have been relatively steady for the past two weeks. Daily COVID cases and current hospitalizations have decreased about 33% since their all-time highs at the end of July. These indications are a positive sign for economic recovery and stock market performance near-term.

  2. 📉The number of reopening states have been on the decline; currently 25 states are in the reopening process, while 13 states are paused and 12 states are reversing. While the national numbers for daily covid cases and hospitalizations are on the decline, select states are experiencing high levels of cases, resulting in pausing or reversing of their economic reopenings. While this is not necessarily a negative impact on the economy as each state contributes to the economy differently, it is a sign that COVID is not yet controlled across the nation. We have just begun tracking the reopening status for each state individually, so we’ll add color next time on which states changed statuses and why.

  3. 📉 Unemployment claims jumped above 1M last week again after dropping under the 1M mark just last week. The market took a sharp ~1% drop on Thursday when unemployment claims numbers were released as it claimed above 1M. Just last week, unemployment claims numbers fell under 1M for the first time since March. State reopenings and decreased COVID cases will help decrease this critical unemployment metric.

  4. 📈 Biden takes a more moderate stance on healthcare at the Democratic National Convention, which is a positive indicator for biopharma. At the Democratic National Convention, Biden took a more central stance on healthcare noting that his plan is to provide a Medicare-like option as a public option besides private healthcare. This is better news than universal healthcare, which could impact drug pricing capabilities significantly for biopharma companies. We are interested to see how the Republican National Convention pans out on this front and how Trump will approach drug costs.

WX Capital maintains positive towards the U.S. economic recovery and where the market is currently positioned. The stock market has hit all-time highs, recovering from the COVID impact and exceeding broadly. However, there are several industries and companies that have not yet seen the quick recovery as the broader market has seen, especially in tech. There’s still room for growth in certain areas, which we are evaluating closely. As always, please don't hesitate to reach out with questions!


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