WEEKLY UPDATE – June 15, 2020
The Week on Wall Street
Investor sentiment turned negative last week, amid an increasing number of COVID-19 cases in states where reopening has been underway as well as a subdued economic forecast from the Federal Reserve.
The Dow Jones Industrial Average dropped 5.55%, while the Standard & Poor’s 500 lost 4.78%. The Nasdaq Composite Index slipped 2.30% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, fell 3.10%.
The optimism that drove stock prices higher these past several weeks slipped away on reports of a jump in COVID-19 cases, which sparked worries of a second wave slowing the economic recovery. A sober forecast for the economy by the Federal Reserve further dampened investor sentiment.
The week started upbeat with “reopening” stocks, e.g., financials, transportation, retailers, travel and leisure, and industrials, leading the way higher. But the momentum was soon lost as stocks turned mixed on Tuesday and Wednesday and then moved decidedly downward, with the S&P 500 losing 5.9% on Thursday.
Amid a volatile week, big technology companies resumed their market leadership, with the NASDAQ Composite closing above 10,000 for the first time. Stocks pared their losses on Friday, but it wasn’t enough.
Fed Forecasts Economic Growth and Interest Rates
On Wednesday, the Federal Reserve said that it would keep the federal funds rate near zero and maintain its monthly purchases of Treasury bonds and mortgage-backed securities.
The Fed also issued its forecasts for 2020-2022, indicating that it saw its benchmark federal funds rate remaining at zero, with inflation at 0.8% for 2020, increasing to 1.6% in 2021, then to 1.7% in 2022. Fed officials also expect the economy to shrink by 6.5% this year, with Gross Domestic Product growing 5% and 3.5% in 2021 and 2022, respectively. Their forecast for unemployment predicts a steady decline over the next 2½ years, from 9.3% by the end of 2020 to 5.5% in 2022.
THIS WEEK: KEY ECONOMIC DATA
Tuesday: Retail Sales. Industrial Production
Wednesday: Housing Starts.
Thursday: Jobless Claims. Index of Leading Economic Indicators.
Source: Econoday, June 12, 2020
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: Oracle (ORCL) Lennar (LEN)
Thursday: Kroger (KR)
Source: Zacks, June 12, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
- • 1 head of kale, stemmed and thinly sliced
- • ½ orange, juiced
- • ½ lemon, juiced
- • ½ cup sesame seeds
- • Salt and pepper
- • 1 Tbsp. extra-virgin olive oil
- • 1 Tbsp. apple cider vinegar
- 1. Place kale into a salad bowl.
- 2. With your hands, toss with orange juice, lemon juice, seeds, and salt.
- 3. Let the kale sit a few minutes.
- 4. Add the olive oil and apple cider vinegar, then mix well.
- 5. Refrigerate until ready to serve.
Recipe adapted from FoodNetwork.com
A Compromise Can Be a Beautiful Thing
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov
Avoiding a Back-Nine Blowup
The front nine goes really well for you: you have a couple of birdies, an eagle, or you par half the holes, and it looks like you’re on pace to break 90, 80, or whatever your goal may be. On the back nine, that’s all you can think about. You end up putting pressure on yourself, and your game quickly suffers.
The lesson here is that you can only play one shot at a time. Thinking about your scorecard instead of the shot you need to play right now interferes with your focus and process. If you break 90 or 80, it won’t be because of adrenaline or daydreaming. It will be because you maintain your focus. So, stick to your pre-shot routine, and focus on each shot at hand. Think of the hole in front of you, not the “whole” of your round, and your back nine may be as good as your front nine.
Tip adapted from LiveAbout.com
Why It’s Important To Stop and Smell The Roses
Tips adapted from MSN.com
Going Green for Baby
Tip adapted from GreenAmerica.org
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.
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 The Wall Street Journal, June 12, 2020
 The Wall Street Journal, June 12, 2020
 The Wall Street Journal, June 12, 2020
 The Wall Street Journal, June 11, 2020
 CNBC, June 12, 2020
 CNBC, June 10, 2020
 FoodNetwork.com, June 12, 2020
 IRS.gov, June 12, 2020
 LiveAbout.com, June 12, 2020
 MSN.com, February 4, 2020
 GreenAmerica.org, June 12, 2020