Watch the CPK Market Action Report: August 2020
Stocks continue to show resilience in the face of a pandemic and an economic crisis impacting this nation. Just how far can positive trial results for a Covid treatment push this market and how or when will the November election start to play a role in all of this?
Watch the full 3-minute Market Action Report now:
August 2020
Stocks rose in July as better-than-expected corporate earnings and progress on a COVID-19 vaccine encouraged investors.
The S&P 500 gained 5.5 percent, while the Nasdaq composite picked up 6.8 percent. The Dow Industrials, which have lagged much of the year, rose 2.4%.
Stocks raced higher at the start of the month, as the Nasdaq Composite set multiple fresh record highs.
Overall, economic reports were upbeat, and investors focused on the positive trial results from a COVID-19 treatment.
Stock prices slipped after an uptick in jobless claims and increasing tensions in the U.S.-China relationship. But the markets closed the month strong after mega-cap technology names checked in with solid numbers in the second quarter.
The month of August has gained a reputation for being one of the more volatile months of the year.
Last August, for instance, the S&P 500 Index posted 11 moves of more than one percent in 22 trading days.
One of the reasons for the volatility is that many traders are away on vacation, resulting in light volume, which may have the effect of amplifying market volatility.
This August will stand on its own merits. But investors should be prepared for headlines that could result in outsized moves.
While my indicators still show fixed income and cash in the top two dominant positions, Domestic equities are nipping at the heels of Cash suggesting a change is coming very soon.
To me, there are two big factors we need to consider. First, is the upcoming election. With Joe Biden expected to announce his running mate this week or next, I think we will get some insight as to how the market might react to a Biden win in November. This matters when you evaluate the possible volatility we could encounter in the short term and the timing of it.
Second, you have to assume there is definitely one or more treatments coming soon
along with one or more vaccinations. While nobody knows when this will happen, I would be shocked if this doesn’t happen before the November election for reasons I will let you assume on your own.
Regardless of when the treatments or vaccinations are released, there is obvious speculation this could create a major shift in portfolios to sectors of the economy that will benefit the most from them. Stay tuned to learn more about those sectors and when the ideal time might be to start getting repositioned.
As a reminder, my current allocation is not a recommendation. I still expect heavy volatility to continue for some time. Successful navigation through this environment will definitely require a fluid plan with all hands-on deck.
Regardless of what happens next, investors like you need to have a simple and yet solid financial plan that reduces RISKS, COSTS and TAXES while securing the necessary income you need to maintain your lifestyle throughout retirement.
If you don’t have a plan OR you’re not comfortable with the plan you have, call me today to get pointed in the right direction.
I’m Chad Kunc and that puts a wrap on the June 2020 Market Action Report. Thanks for joining me. It’s time for me to get back to the markets.
And that action starts, NOW!