Daily Capital

September Market Recap: COVID-19 Market Recovery Hits Pause

Craig Birk CFP®, Chief Investment Officer at Personal Capital, recaps the major market-moving events in September.

Coronavirus Market Recovery Hits Pause

The stock market’s torrid recovery from the coronavirus induced drop hit a pause in September. The month began with a swift sell-off in high-momentum technology related shares, providing a reminder for some that no part of the market is immune to volatility.

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New Covid-19 cases in the U.S. flat-lined at around 40,000 per day, which was better than July or August but still disturbingly high. Cases in some European countries that had lowered transmission to near zero have again increased significantly in the past few months, suggesting efforts to contain the virus through economic shutdowns are only effective temporarily. Jobless claims continue to tick lower but remain extremely elevated.

News surrounding progress for a vaccine was mostly positive this month, though the outcome remains highly uncertain. Since the pandemic began, headline stock indexes in the US are roughly flat but have been supported by gains in a narrow group of the biggest technology companies. The average stock in the S&P 500 remains down about 7% from the February peak. This suggests a successful vaccine in 2021 could present the biggest opportunity for stocks battered in 2020.

How Will the Election Impact the Market?

With the election rapidly approaching, many are bracing for volatility. With the outcome likely to go either way, an immediate market reaction can be expected, but we note that the market has not reacted strongly to swings in the polls and does not seem to have significant preference for either candidate or party. It is unclear how President Trump’s contraction of Covid-19 will impact voters, and much may depend on how quickly he recovers. Once again, initial market reaction was muted.

An emerging risk is a contested election, which could cause short-term pressure. Even if this occurs, we view it as highly unlikely that corporate earnings would be significantly impacted. For the rest of 2020, the success of congress to pass additional stimulus may be more impactful than the election results. Markets appear optimistic there will be a package, but for now the two sides remain far from agreement.

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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