10/30/20: Checking in on a volatile week

We wanted to check in with you during this volatile week. So much has happened that is moving the market. Let’s assess.

Monday, the market dropped 1.86%. The fall was largely driven by the increase in Covid cases, and the additional lockdowns in Europe. There is fear that the U.S. will shut down again, if cases continue to rise and we overwhelm the hospitals and ICUs.

Tuesday we saw a much smaller retraction, of only 0.30%. Little to note on Tuesday, except some investors’ worry about the Big Tech hearing in front of Congress starting Wednesday.

Wednesday a large market sell-off sent the market down 3.53% in one day. The decline occurred due to continued fear that the economy will shut down again, and, trepidation around tech regulation coming for the big FAANG names that have been the safe place for investments during this pandemic.

Thursday, the pattern reversed. We saw an increase in the market of 1.19%. The upswing came on hopes for Big Tech earnings later that day, as well as the positive news that third quarter U.S. GDP actually beat expectations and grew 33.1% on an annualized rate, or 8.275% for the quarter—much higher than anticipated.

Friday as we write, the market is back down around 1.89%. This means that 4 out of 5 days this week have had market swings of over 1%. Big Tech beat earnings across the board last night: Apple beat top and bottom line, Amazon beat top and bottom line, Google beat top and bottom line, and yet the market is still falling today. The reason is, that those earnings are looking at the past. Today’s prices are ignoring the great numbers that came out of Q3, and are pricing in a new reality based on future uncertainty and a potential shut-down in the economy.

This has absolutely been one of the most volatile weeks we have experienced this year, which has already been one of the most volatile years in recent memory. Many of us were expecting more volatility as we came closer to the election, however just because it was expected does not make it any easier to stomach.

We want to let you know that your portfolios are built to withstand short-term volatility. We still believe that you are invested in the best sectors to help move through this period.

Wishing you all the best going into the weekend, and happy to put this week in the rear-view mirror. Tune in tomorrow at 10AM for our weekly market video update, coming to you by email or available on our Facebook page. We’ll share more details and insights on what is happening.

~ With care and concern,
from all of us at Colman Knight



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