Our Weekly Commentary
Severin Commentary 6/15/2020
The markets continued to surge early last week on optimism about the economy reopening as well as a May jobs report that was much better than expected as many businesses began reopening across the country. The unemployment rate fell to 13.3% rather than increasing to the nearly 20% that was forecasted.
However, that optimism quickly faded after Federal Reserve Chairman, Jerome Powell, spoke on Wednesday afternoon. He gave an outlook that was not as optimistic as many anticipated as well as downplayed the upbeat jobs report from the prior week. Mr. Powell said that the Fed predicts it may take years for the labor market to return to where it was before the COVID-19 outbreak occurred.
Additionally, Mr. Powell stated that they kept the target interest rate from 0-0.25 percent, and they will maintain this target through 2022. The bleak outlook and tone given by the Fed Chairman created a risk-off mentality, and that selling pressure continued through the end of the week. The markets saw its worst one day sell off since early March on Thursday, June 11th, sending the S&P down about 5.75%. Some of those losses were recouped on Friday as a buy-the-dip opportunity came to fruition. However, all 11 sectors finished the week down by at least 1.9%.Our
We suspect that there will be more volatility in the weeks to come. However, with many medicines in development for a cure for COVID-19 and the economy beginning to reopen, the prospects for a quick, ‘V’ shaped recovery look more viable than we previously thought.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. To determine what is appropriate for you, consult a qualified professional.
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