Back To School In A New Way

Back to school marks the end of summer, the arrival of cooler weather and kids hitting the books again. Back to school this year will be different because of the unique challenges involving COVID-19.

This year, we’re all getting an education in remote learning, working from home, and social distancing. While the COVID-19 fight is not over, more progress has been made recently. New cases and hospitalizations in the United States have been falling steadily since mid-July. Several promising vaccine candidates have entered phase-three trials in the United States and the FDA could potentially fast-track approval for emergency use later this year. One well known company has developed a $5 COVID-19 test that the company claims can produce reliable results in only 15 minutes. The fruition of pandemic developments may be getting us closer to the end of the pandemic.

The stock market has responded to these promising developments with its strongest August performance since 1984. Stocks also received a boost from surprisingly strong recent economic data, which already may have brought an end to the “lockdown recession.”

The brightening economic picture helped second quarter corporate earnings beat estimates by an average of 23%, more than any quarter since FactSet began tracking earnings statistics in 2008. Estimates have risen to the point where analysts expect 2021 S&P 500 earnings to surpass the 2019 level.

Although the recession may be over technically, the path forward could be challenging. Several major corporations recently announced thousands of layoffs. September historically has been the weakest month for S&P 500 stock performance, but during election years it switches to October when policy anxiety typically peaks and the potential for market volatility increases.

At the same time, we believe that we could be in the beginning stages of a new bull market, which suggests additional gains for stocks may be forthcoming. As always, we are paying close attention.

Please Contact Us to discuss any questions you may have about your own financial planning and investment needs. Best wishes for good health as we enter into a new season.