Happy 4th of July Weekend! I hope everyone has a great time celebrating with friends and family.
Today I wanted to share a quick update on the market because the first half of 2020 is in the history books.
After falling sharply in the first quarter because of COVID-19, the S&P 500 saw a huge rebound in the second quarter.
The leading index gained 20% in the second quarter, its best quarterly gain since 1998.
After the nice rebound the S&P 500 (SPY) is now only down 4% on the year.
- The Vanguard Global Stock Market (VT) is down 7%.
- Emerging Markets (EEM) is down 10%.
Take a look at the action in the chart below.
What Should We Expect in the Third Quarter?
There’s plenty of pessimism on the Street right now. And there are definitely speed bumps ahead.
- COVID remains a drag on global economic growth.
- The US election happens in November.
However, despite ever-present challenges, I am optimistic. I am expecting more gains from the stock market in the second half of the year.
COVID is a lingering problem but the economy and jobs are recovering nicely. The latest jobs report shows unemployment dropping to 11%. This is a nice step in the right direction.
Global central banks just flooded the market with trillions of dollars and that money is working its way into all kinds of assets including stocks, bonds and real estate.
And finally, the stock market is obviously very resilient right now. We saw a big drop in stocks, but stocks were quick to recover. Momentum is clearly higher right now and it’s going to take something massive to derail that after we just dealt with a huge scare from COVID.
That’s a quick snapshot and the second quarter and what I am expecting moving forward.
I am bullish on stocks and I view any weakness as an opportunity to deploy cash and invest more.
I’ll be back next week with another update. Have a great day!