Don’t Fret

2020-01-14 Market Update.

The S&P 500 was modestly down last week. Lingering concerns over Brexit, (globally pretty insignificant) and the fate of further U.S. fiscal stimulus caused the SP500 to slip 1%. Tech and banks fell the most as yields rallied early in the week.

The first round of COVID vaccines shots were delivered and executed in the U.K. last week, while they are being delivered domestically this week. Front-line health workers and the elderly in high-risk areas will be first to receive a dose starting this week here in the USA. This will still be a long process that runs through 2021, with ongoing or ramping restrictions during the holidays.

Equities

For now, investor sentiment continued to buzz around two high-profile and high-flying IPOs last week. Airbnb came to market with a surge of more than 110% by the close on its first day of trading, lifting the market cap to around $100 billion, 3M, American Express and IBM are worth that much. Food delivery company, DoorDash rose more than 90% in initial trading last week.

This has caused heightened sentiment at the retail level, largely Millennial age and younger. Much is being made of Investors’ Intelligence survey ratio of bulls to bears pushing levels last seen at the turn of 2017/18. While short term cautionary for traders, longer term investors should not yet be concerned at the overall level of the S&P500.

Equity investors will be looking at a world in 2021 characterized by a gradual return to the “old normal’ in the real economy, a steepening of  yield curve interest rates and low but accelerating inflation. Beaten down groups, like banks, travel, leisure, and variable spend consumerism have the potential to gain. S&P 500 banks are still down almost 20% y/y versus a more than 40% y/y gain in technology.

 

Weekly market updates contain general information and expresses views of Oak Harvest Investment Services. Data, Articles, and information cited are believed to be reliable at the time of creation, but are not guaranteed. Nothing in this content is intended as, nor should it be regarded as, personalized investment advice. Strategies and ideas discussed may not be right for you.  Views and opinions expressed may change without notice and do not constitute a recommendation, or an offer or solicitation to buy or sell securities. In addition, Oak Harvest makes no assurance as to the accuracy of any forecast made. Indexes like the S&P 500 are not available for direct investment and your results may differ. Past performance is not indicative of future results. Investing involves the risk of loss.