Our Weekly Commentary
Severin Commentary 6/29/2020
Major indexes took a beating last week which brought the S&P 500 down to -2.86%. The biggest sector losers were Energy (-6.45%), Financials (-5.25%), and Communication Services (-5.22%). Fears surrounding a new surge in coronavirus cases caused much more uncertainty about a quick and full recovery to our economy. Additionally, new tariff threats on the European Union by the United States created an additional headwind for markets and really emphasized the sell off on Friday, when the S&P was down 2.38%.
Communication Services were hit hard last week (-5.22%) when Facebook’s biggest advertisers including Coca-Cola, Hershey’s, and Verizon boycotted the platform. These companies are demanding that Facebook change its approach on how they handle misinformation and hate speech. Blue chip companies make up roughly $17.5 billion in annual advertising sales for Facebook1.
Energy fell the hardest (-6.45%) due to fears of oil demand not coming back as quickly as expected due to a surge in the number of coronavirus cases. Additionally, some states have taken measures to curb the coronavirus case count. For example, the Texas governor ordered all taverns to close and for restaurants to reduce to 50% occupancy2. As of Friday, June 26, there was an increase in number of daily coronavirus cases in 29 states with southern states rising the sharpest3.
With many investors on edge about the surge in coronavirus cases, a shaky start to the reopening of the economy, and tariff threats on the EU, markets may have heightened volatility for the foreseeable future.