Our Weekly Commentary
Severin Commentary 7/27/2020
Last week was volatile for the market due to a resurgence in coronavirus cases, certain spots of the United States shutting down again, and increasing tensions between the United States and China. Additionally, US jobless claims unexpectedly rose for the first time since March, signaling that the economic recovery may be stalling.
Initial U.S. jobless claims rose to 1.42 million for the week ended July 18th, the Labor Department reported Thursday. On average, economists expected jobless claims to come in at 1.3 million. This may be due to increasing coronavirus cases in certain areas that have forced businesses to shut down again or never reopen. Another reason could be job layoffs that have persisted in certain industries like restaurants, movie theaters, and airlines where demand has crumbled and forced companies to cut costs (i.e. lay off employees).
In addition to the rise in jobless claims, tensions between the United States and China continued to rise. Most recently, the United States government ordered the Chinese consulate in Houston to close. This was due to claims by US Secretary Mike Pompeo that China was stealing intellectual property from the United States. Mr. Pompeo stated China was stealing “not just American intellectual property... but European intellectual property too... costing hundreds of thousands of jobs." It was also noted that ‘unidentified individuals’ were filmed burning files in the Houston building’s courtyard. Two Chinese nationals were charged for allegedly spying on labs developing Covid-19 vaccines and got help from state agents for the theft.
The coronavirus case count surged again last week as economies began reopening and COVID-19 testing kits continued becoming more widely available. There is also a big debate on how to reopen schools this fall as many are planning virtual or blended classrooms, meaning some will be in the classroom and some will be learning from home. As of Friday, there were more than 4 million confirmed cases of COVID-19 in the United States, which has account for more than 140,000 deaths.
All major US indexes finished down for the week, with the S&P 500 down 0.28%, the Dow Jones Industrial Average down 0.76%, and the Nasdaq Composite down 1.33%. The coming week comes with much anticipation as more than 33% of companies in the S&P 500 report earnings, most notably Amazon, Apple, and Google parent Alphabet. Only time will tell whether these high-flying tech stocks can live up to the growth story that has been priced in.
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.
Investment advice offered through Severin Investments, a Registered Investment Advisor.
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