Market Update: Aug 13 2020
- "Stay-at-Home" Stocks
- Presidential Election
Here is a recap of our live Q&A session held on 8/13/20 presented by Joe Randazzo JD, CFP® from FNA Wealth Management and Dave Stone CPA, CFP® from Tartan Wealth Management.
Details for our next session, August 20, can be found here.
What are you watching in the stock market over the coming weeks?
We have seen the market continue down the path of the big tech companies driving returns this year. The NASDAQ has been setting records and closed above 11,000 mark for the first time in history on August 6th. The growth vs. value spread has been getting wider each week over the last month. It appears to us that investors have looked upon the big tech names as their safe investment. When economic news is less than favorable the big tech and the “stay-at-home” stocks we have discussed have led the market.
These are the things we are watching over the next few weeks:
-Earnings announcements for the big tech companies…WILL INVESTORS SELL THE NEWS?
-COVID 19 cases on the rise in numerous states. Will states go back to lock-down mode? Phase 3 of vaccines and progress toward a vaccine by end of year.
-What will the new stimulus package look like and when will it get done?
-Will growth vs. value difference continue to widen?
-Gold prices at all-time high and dollar weakness.
-Less than 100 days from 2020 election.
These are only a few of the issues that could impact the markets and create more volatility over the coming months. We think it is likely that the market could pull back 10-15% over the next few months. Therefore we feel clients should continue to consider dollar cost averaging in to the markets.
What impact could the election have on the markets?
There are 3 possible results from the election and their potential impact on the markets.
- Status quo – Trump wins and Republicans maintain majority in Senate Possible impact: Continuation of Tax Cut Jobs Act policies and possible payroll tax cuts or capital gains cuts.
- Biden wins and Democrats control both House and Senate Possible impact: Roll back of Trump tax policies.
- Biden wins and Republicans maintain Senate majority. Possible impact: Gridlock on tax issues and spending.
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