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November 2, 2020

11.2.2020 – Market Update.

Equity markets fell last week with the S&P 500 dropping -5.6%, its worst week since March, ending the week at 3270.  This decline leaves the S&P 500 up about 2% year-to-date. Delays in a U.S. fiscal stimulus package, rising COVID cases across most of the world, and the up-coming Presidential election had traders in a tizzy. All of the S&P 500’s sectors fell this week. Consumer discretionary had the largest percentage drop of the week, down 6.6%, followed by a 6.5% slide in the industrial sector, and a 6.4% drop in technology stocks.

Politics sidelines positive economic news

Positive economic news has moved to the back burner as the final countdown to the election draws attention away from the green shoots in the markets.  Please listen to our most recent podcast entitled: “Waiting no more — This is how early bull markets.”

On the election front, historically, elections are more of a swerve on the underlying path for the markets, than a change in overall trend. Broader macro trends chiefly dictate the markets’ path. For example, in 2000, the market was stuck in a post-tech bubble bear market when President Bush won. In 2008, it was dealing with the Great Recession under the Dems. And in 2012, things were setting up for a reacceleration in the markets and economy on the back of QE3 launched Sept 14, 2012.

Real economic growth

Below is a chart on the “real growth” in the economy as seen via the Treasury TIPS market.  One can see that the setup for a reacceleration in the economy’s real growth rate — and therefore a broadening stock market, and resumption of the ongoing bull market — is similar to both 2012 when a Democrat held the Presidency and 2016 when President Trump won.

USGGT10Y Index

Resources

  • Our complete second half outlook has been also posted and can be found by clicking here.

Additional interesting articles:

 

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.