Daily Capital

Markets Rally in June Despite COVID-19 Resurgence

Craig Birk, Chief Investment Officer at Personal Capital, recaps the major market-moving events of the past month.

Markets Rally Despite Rising COVID-19 Cases

Stocks continued to march back toward even for the year, even as COVID-19 infections began rapidly accelerating in many states. It is unclear how local and state governments will react. Re-opening measures will likely decelerate or partially reverse, but there seems to be little collective or political will to revert to the most restrictive shutdown rules. This could change if deaths reaccelerate at a similar pace as we are seeing with cases now.

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There are some encouraging trends. Areas that peaked in early spring, such as New York, New Jersey, Northern Italy, and Spain continue to see declining case counts and especially deaths. While this does not rule out further spikes in these areas, it allows for optimism that there is a pattern and a behavioral path where the ultimate infection rates could be lower than initially predicted.

New Jobs Added in June, But Are We Seeing COVID-19’s Full Impact Yet?

On the job front, news continues to be encouraging, though does not yet reflect the possible impact from recent increasing virus spread. The US economy added a stronger than expected 4.8 million jobs in June, bringing official unemployment back down to 11.1%. This was almost unimaginable at the start of the year but is also significantly better than most predictions from around the start of Q2.

Markets Continue to Climb Despite Changing Political Tide

On the election front, Joe Biden passed Donald Trump as the favorite during June. While we urge investors not to let politics influence strategy in general, we found it encouraging that markets did not react strongly to shifting political tides. After taking a break in May, the momentum trade favoring the very biggest tech stocks, and growth stocks over value in general, resumed in June. In our view, momentum driven approaches are currently bidding up large growth stocks with little regard for price, simultaneously creating a void in demand for small and value stocks. When this wll end, we do not know. But we feel strongly that maintaining significant exposure to areas outside of the hottest parts of the market is increasingly critical.

Our Take

The first half of this year reinforced the benefits of a personalized strategy designed to be maintained through economic and news cycles. We believe avoiding market timing, staying diversified, and being disciplined about controlling what can be controlled puts our clients in the best position for long-term success. This is true in general and is proving to be especially so through the COVID-19 period.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Craig Birk, CFP®
Craig Birk leads the Personal Capital Advisors Investment Committee and serves as Chief Investment Officer. His focus is translating improvements in technology into better financial lives. Craig has been widely quoted in the Wall Street Journal, Bloomberg, CNN Money, the Washington Post and elsewhere. Prior to Personal Capital Advisors, he was a leader within the portfolio management team at Fisher Investments, helping assets under management grow from $1.5 billion to over $40 billion. Craig graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.
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