8/9/2020: Weekly Wrap-up and What to Expect

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President Trump announced four executive orders focused on COVID aid on Saturday because discussion around the second stimulus bill has stalled.

Market Movers

The S&P 500 climbed ~1.9% last week at a consistent upward trajectory. Like we described last week, there’s a lot of positive momentum in regards to COVID and the economy. This week was met with additional positive news, such as decreasing daily COVID cases and death as well as July jobs beating expectations. 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 have plateaued, and new daily cases and current hospitalizations are starting to decrease. This week, the number of daily deaths due to COVID flattened and seems to have begun a downward trajectory. Furthermore, daily COVID cases and current hospitalizations have been decreasing consistently for the past two weeks. Overall, this second COVID peak was not as bad as the first. Despite higher case counts, there were relatively fewer hospitalized and deaths.

  2. Currently 27 states are in the reopening process, while 13 states are paused and 10 states are reversing. After the second COVID peak, states are taking the re-opening process more seriously and cautiously. We hope to see states continue to re-open, which will help reduce unemployment rates and help economic recovery. As of this week, 54% of states have re-opened to a degree. We’ll start tracking the percent of re-opened states moving forward now that COVID cases are hopefully under control.

  3. In July, the U.S. added 1.8M non-farm jobs, decreasing unemployment from 11.1% to 10.2%. The July jobs report brought unexpected results on Friday that will likely drive the stock market upwards next week. In July, nonfarm payroll employment rose by 1.8M beating expectations by ~20%. This news was especially surprising given ADP’s preliminary jobs report came in lower than expected. We hope to continue to see this trend as the reopening process continues in the U.S. and the economy returns in full force.  

  4. President Trump announced four executive orders focused on COVID support after stimulus talks stalled on Capitol Hill. In a surprising move on Saturday, President Trump announced four executive orders to support Americans during COVID. These executive orders are in response to the slow-moving process of developing a second stimulus bill. The orders include 1) $400 per week unemployment benefits 2) payroll tax holidays 3) extended eviction moratorium and 4) deferring student loan payments. These executive orders are certainly an effort to garner additional voter support as we enter election season, but will ultimately help companies and those unemployed due to COVID. These executive orders will likely help push the market further. 

WX Capital is positive on the near-term performance of the stock market, especially as states continue to re-open and unemployment continues to drop. Now that COVID cases are decreasing again and Americans (hopefully) understand the severity of the situation, re-opening and unemployment is top-of-mind. We will continue to monitor the progress of these two metrics as indicators for economy recovery and stock performance. Hopefully, COVID cases remain low and we can continue on this path to recovery. As always, please don't hesitate to reach out with questions!

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