The Markets This Week

Posted on September 15, 2020 by The Weekly Commentary

by William Henderson, Vice President / Head of Investments
The U.S. equity market finished the week on September 11, 2020 lower across all three markets: Dow Jones Industrial Average (1.7%), S&P 500 Index (2.5%) and the tech-heavy NASDAQ (4.1%). The unknowns we have mentioned in previous weeks continue to haunt the markets: continued COVID-19 pandemic and the search for a vaccine, the U.S. Presidential Election, the lingering but recovering U.S. Recession and finally political and social unrest bordering on mass protests. As if that’s not enough, we can toss in wildfires on the West Coast and hurricanes on Gulf Coast. Given all that is being thrown at the economy, the recovery continues its slow slog towards normalcy. We may have four unknowns, but we have one known and it is a really big one. It is Jay Powell and the unstoppable power of the FED. Mr. Powell has promised to give the markets and the economy historic low rates into 2022. Practically “free” money, trillions in economic stimulus, an obeisant view of inflation and we have a FED that is all about forcing an economic recovery. Treasury Secretary Mnuchin continues to work on an additional stimulus package but Republicans and Democrats cannot come to an agreement.

We continue to see evidence that pockets of the economy are doing very well. Amazon.com announced on September 14, 2020, that they will be hiring 100,000 full- and part-time employees across the U.S. and Canada. Anyone that has a doorstep or front porch in the U.S. is probably used to seeing the cardboard smile boxes sitting there with recently ordered goods from Amazon.com. Other stories to watch: Oracle’s winning bid for the U.S. Operations of the video-sharing app TikTok; the massive, potentially record-setting $30 billion IPO of the Chinese fintech titan Ant Group, co-founded by Alibaba billionaire Jack Ma; and the ongoing global race for a COVID-19 vaccine.

It continues to be a battle between the unknowns and the knowns. We have major issues occurring in 2020 that continue to worry the consumer (Main Street) but the FED is doing all it can to push a recovery, and the markets (Wall Street) seem to like that story a little bit more. Our advice: Stay diversified and keep a long-term view of markets and the economy.

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