Macro & Market Matters - May 14
Portfolio Manager Jack Janasiewicz discusses how the near-term market picture has been affected by COVID-19 and what an economic restart might look like.
- Federal fiscal and monetary measures taken in response to COVID-19 have helped to blunt the immediate economic shock of the lockdown. In addition, the sectors most negatively affected by the lockdown represent only about 7% of the S&P 500®. Sectors that make up approximately half of the S&P 500® have been less affected, with many able to operate at closer-to-normal levels in the “stay-at-home” economy.
- While the risk of a “second wave” of cases is significant, frontline US healthcare workers have demonstrated strength and resolve in the face of COVID-19. They have proven able to keep fatality rates relatively low across the majority of cases and are well-positioned to continue providing treatment over the near term. Reopening across the US will be a slow process, but will incorporate new innovations in behavior designed to protect hygiene and limit the spread of the virus.
- As of mid-May, early evidence of a gradual reopening in the US includes upticks in airline traffic, road traffic, and consumer spending. Market surveys suggest individual investors remain bearish, while institutional investors and financial professionals appear bearish-to-neutral on the near term. The level of confidence among consumers and business leaders will be key in the months ahead.
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