Emotional investor reaction to news headlines drove the wild market fluctuations we saw in the first half of the year. Investors should expect volatility to continue, with an election taking place during the ongoing pandemic and re-opening of the economy.
Investors have recently focused their attention on the foreign exchange and precious metals markets, trying to interpret the signals that the U.S. dollar and gold prices are sending. These markets indicate worry about expansionary monetary and fiscal policies.
The COVID-19 pandemic has taken a toll on many individual lives. The widespread economic disruption is unlike any environment investors have seen in their lifetimes. This Investor Q&A shares insights and ideas to help investors manage through these difficult times.
The technology sector has been the primary catalyst for the recovery, now accounting for a record 38% of the S&P 500 (higher than the 33% seen in 2000), with the top-five names accounting for a record 22%. We have seen a recent broadening of leadership, however, with strength in small caps, value and emerging markets.
Existing home sales soared by 20.7 percent in June as homebuyers rushed back into the housing market post-lockdown. Aside from the extreme lows for April and May, the 4.72 million unit annualized sales pace was still the weakest since September 2012 as low inventories of homes on the market and continued virus concerns dampen sales. Still, given the surge in demand over the past few months, it looks increasingly likely that the bottom in housing activity for this economic downturn is in the rear-view mirror.
The economic recovery gathered still more steam in June as job gains and retail spending spiked again while the business sector jumped back into expansion. A record drop for real GDP is still expected for the second quarter, but there is a broad consensus that there will be a sharp rebound in the third quarter — which could start a period of above-trend growth that extends for at least a couple of years as the economy heals from the COVID-19 recession.
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