Monthly Market Update:
Recap of July 2020
The month of July did not disappoint for the stock market. Sure, there are still looming concerns with the virus among other issues, but looking at the stock market you would have thought all is well in the world.
If this is your first time tuning in, I’m Eric Powell, the founder of RightPlan Financial. Let’s dive in and recap what the markets and economy have recently done and discuss what we are doing for client portfolios.
For the July numbers, the stock market was positive in many of the indexes we monitor and invest in. The S&P 500 was +5.64%, Dow Jones Industrial Average +2.51%, Nasdaq +6.85%, MSCI EAFE +2.33%, MSCI Emerging Markets +8.94%, Barclays US Aggregate Bond +1.49%, Barclays US Corporate High Yield +4.69% and Barclays Municipal +1.68%.
If you are looking at the beginning of the year through July 31st, the Nasdaq has outperformed the Dow and S&P 500. The Nasdaq is positive for the year through July 31st 19.76%, while the S&P 500 is +1.25% and the Dow is -7.39%. Currently, tech stocks in the Nasdaq have been the go to this year. These tech stocks make up a fair bit of our portfolios, providing the opportunity for positive returns, though we have not neglected the Dow and S&P 500. As the saying goes, every dog has their day and we know this saying aligns with the stock market as well. The stocks that are lower have growth opportunity over the long term. We continue to stick to our investment strategy that is primarily asset allocation, making adjustments when needed to keep clients in line with investment goals.
In July, the GDP 2nd quarter results were released and it set a record, but not a good one. The 32.9% quarter over quarter GDP decline was the worst single quarter decline in US history. It sounds awful, but shutting down the majority of the US and limiting sales to grocery stores, online sales and a few other businesses, isn’t really a fair way to break the record.
Though the GDP was down, the economy has somewhat been back to work, both figuratively and literally. The unemployment rate was reduced to 11.1% in July. This is a positive from the April unemployment number which was 14.7%
The market is forward looking and it shows the confidence investors have in the stock market and the US feds have been pushing money into the economy doing everything they can to keep it afloat. There is even talk of another stimulus coming soon.
At this time, it is hard to say what exactly is to come for the stock market the remainder of the year. A choppy ride is to be expected as the virus continues to be a hot topic, along with the upcoming election, China tensions and continued social unrest.
Our ultimate long term priority is to meet your financial goals. The key to doing this is to remain invested, trust the process and be sure to know your comfort level with investing so you do not make a decision that could cost you long term. Be sure to stay the course and if you have any questions please reach out.