We hope this finds you healthy and well. The market edged higher last week, although there was dispersion among the underlying sectors. Here's a look at this week's highlights:
View the full recap of this week's events in the link, below.
Acknowledging the power of the headling S&P, the market has rallied almost 50% off its March low. But peeling back the onion reveals less encouraging data: Apple alone was responsible for the majority of the S&P's move, as shares surged 8.2% for the week. While there's no doubt that tech shares have powered the indices higher, the ratio of stocks finishing higher on a given trading day to those which finished lower on the same day has been falling. Narrow market breadth in and of itself is not necessarily a cause for alarm, but it bears watching for additional signs of weakness.
Another idea that's gaining traction right now is the notion of a "K-shaped" economic recovery. It refers to the diverging fortunes of workers who can effectively perform their jobs at home (the upper arm of the "K") versus those who must be physically present to perform their essential tasks. Not surprisingly, college-educated employees who do most of their work on computers are having a better time of it. We see the prospective pattern as one more reason to impress the urgency of a fiscal relief package upon policy makers in Washington. The longer our elected officials squabble, the greater the damage to the underlying economy will be and the more workers will be left behind as service and consumer industries fail with greater frequency.
Turning to the election cycle, the markets seem to be pricing in a Biden victory with greater confidence. We'll see if Trump can change the narrative at the Republican National Convention this week. We'll be parsing the forthcoming messages (from both parties) for policy clues that may imply actionable investment theses. In the meantime, we continue to monitor developments on medical front for potential COVID vaccine and treatment progress.
As always, please don't hesitate to reach out and schedule an appointment to discuss your portfolio or financial plan.
All the best,
FMA ADVISORY, INC.