Markets, Economy

Weekly Kickstart (7/13/2020-07/17/2020)

7/13/20 8:00 AM

iStock-626627280.jpgStocks continued higher last week, as the S&P 500 rose by 1.76 percent to 3,185.04. That left the benchmark index down just 1.42 percent 2020-to-date, and 42.35 percent above the March low. Those who avoided panicking during the earlier market tumult have been able to benefit the most from the sharp rebound, and encouragingly many 401(k) investors appear to fall into this camp. Indeed, there were only six days of “above-normal trading activity” among 401(k) participants in Q2, according to new data from Alight Solutions. This may not seem too surprising since the S&P 500 jumped by nearly 20 percent in the second quarter, the largest increase since 1998, but despite the strong finish there were actually numerous violent intraday swings in the market during the past three months that make even some of the more volatile price action in recent years appear tranquil in comparison.

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For example, the average high-low delta relative to the previous day’s close in the S&P 500 was 1.88 percent in Q2, more than double the average of the prior four years. Volatility by every measure was even higher in the first quarter but during this extreme period many 401(k) participants were still able to keep their composure. Similar EBRI data released this month showed that the 401(k) balances of consistent participants were up 1.4-5.9 percent on average through the first half of 2020, likely well outperforming those who panic sold in March. Of course remaining calm while markets tumble is not exactly easy, especially for those with an allocation mix that is inappropriate for their unique situation, e.g. nearness to retirement, risk tolerance, etc. Moreover, if the mere thought of some sort of market correction is causing you to lose sleep at night then your exposure to stocks may be too high. Periodic reviews of your positioning can help identify these potential portfolio imbalances ahead of time rather than waiting until the market has already moved against you and your options feel much more limited. Additional assistance is available by consulting with a professional financial advisor and as always, we are here to help with any questions you may have.

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To recap a few of the things we learned about the economy last week, the positives included that mortgage purchase applications rose, service sector activity stabilized, and total job openings rebounded. As for the negatives, credit demand deteriorated, wholesale prices deflated for the third straight month, and initial jobless claims continued to decline at a slowing rate. This week the pace of economic data picks up slightly with several important reports on manufacturing, housing, small business, consumers, and inflation scheduled to be released, along with a handful of speeches from Federal Reserve officials.

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What To Watch:

Monday

  • John Williams Speaks 11:30 AM ET
  • Robert Kaplan Speaks 1:00 PM ET

Tuesday

  • NFIB Small Business Optimism Index 6:00 AM ET
  • CPI 8:30 AM ET
  • Lael Brainard Speaks 2:00 PM ET
  • James Bullard Speaks 2:30 PM ET

Wednesday

  • 3-Yr Note Settlement
  • 10-Yr Note Settlement 
  • 30-Yr Bond Settlement
  • MBA Mortgage Applications 7:00 AM ET
  • Empire State Mfg Survey 8:30 AM ET
  • Import and Export Prices 8:30 AM ET
  • Industrial Production 9:15 AM ET
  • Atlanta Fed Business Inflation Expectations 10:00 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • Patrick Harker Speaks 12:00 PM ET
  • Beige Book 2:00 PM ET

Thursday

  • Jobless Claims 8:30 AM ET
  • Philadelphia Fed Business Outlook Survey 8:30 AM ET
  • Retail Sales 8:30 AM ET
  • Business Inventories 10:00 AM ET
  • Housing Market Index 10:00 AM ET
  • EIA Natural Gas Report 10:30 AM ET
  • 10-Yr TIPS Announcement 11:00 AM ET
  • 20-Yr Bond Announcement 11:00 AM ET
  • John Williams Speaks 11:10 AM ET
  • Charles Evans Speaks 1:30 PM ET

Friday

  • Housing Starts 8:30 AM ET
  • Consumer Sentiment 10:00 AM ET
  • Baker-Hughes Rig Count 1:00 PM ET
 

 

Sources: Econoday, Alight Solutions, EBRI, NAPA, FRBSL

Post author: Charles Couch

Disclosures