A recap of the past week in 3 short headlines.
1. A Healthy Correction or a Warning Sign?
After surpassing pre-pandemic record highs, the market pulled back heavily on Thursday with the S&P down 3.6%, the NASDAQ down 5%, and the Dow Jones down 2.8%. Tech was hit especially hard, after its disproportionately large increase compared to overall market gains. Instead of a swift recovery on Friday, stocks ended in the red. With the markets closed on Monday in observance of Labor Day, it remains to be seen if the selling will continue starting next Tuesday.
Some fear that the market’s tumble is indicative of future pain. Economic numbers continue to indicate light at the end of the tunnel, but the unemployment rate at 8.4% is more than double what it was before the COVID-19 pandemic. The market may have peaked on Wednesday, and could be adjusting to current economic conditions. Conversely, the selling may have simply been profit-taking.
2. Encouraging COVID-19 Data
The overall case count per day and death rate continue to decrease in the United States, but California, Texas, and Florida continue to lead in both case counts and new cases each day.
According to Governor Andrew Cuomo, New York’s “positive Covid-19 infection rate [has stayed] below 1% for 30 straight days.” New York, and New York City in particular, was hit especially hard by the pandemic. Their recent data suggest the pandemic is manageable.
The race for a successful vaccine continues. Russia has claimed their vaccine leads to an immune response, but health officials worldwide remain skeptical. U.S. vaccine trials will receive phase three results in the next few weeks.
3. Looking to the Future
While the world has gained optimism regarding the COVID-19 pandemic, Federal Reserve Chairman Jerome Powell has indicated some sobering realities regarding the U.S. economy in the future. Powell says the economy will need stimulus — meaning low interest rates and increased spending — for the near future. The economy’s next few years may look similar to those after the 2008 Financial Crisis. The “v-shaped recovery” appears to have come to fruition in financial markets, but not economic numbers.