5/11/20 Market Notes
Despite their rough start, stocks fared well last week, gaining about 2 ½% as investors applauded news that states were preparing to reopen their economies. This came after reports showed that 20 ½ million Americans have lost their jobs so far, as a result of Covid-19, a number that could climb further during the month of May. The reopening of businesses is critical, but is also sure to be messy and with its own problems and risks. Moreover, the impact of the current pandemic is not yet fully felt, as cracks in our food system supply chain are just emerging and could exasperate an already difficult situation. And while stocks have rebounded sharply off their March lows, investors should be cautious and avoid the temptation of becoming complacent as a result of the six week rally.
Looking ahead, economic news will likely remain bad, which is widely expected and as such unlikely to materially impact market or investor sentiment. Instead, market participants are likely to focus their attention on 1) the speed and efficiency of various states reopening their economies and any changes in reported coronavirus cases as a result of the reopening, and 2) developments of vaccines and cures for Covid-19. Little else matters in the short term from an investment perspective. Currently markets are betting that the reopening of economies will go relatively smoothly and that a new flare up or resurgence of the virus won’t materialize. If the market is right, stocks are fairly priced and could move higher from here; if not, a sharp sell-off could be in the cards.
Disclosures: This market commentary is written by the 1879 Advisors® and represents the views of 1879 Advisors®. This commentary is not investment advice and should not be used as a basis to make investment decisions. Please consult with your registered investment advisor before making any investment decisions.