In the investing markets world, the news from mid-Q4 2020 brings a rare positive light to the year characterized by levels of extreme volatility. During the end of October the markets were essentially solely focused on the US Presidential elections.
While COVID-19 was still actively gaining a resurgence around the entire world, the markets seemingly were uninterested in the rise of cases and deaths until the next president was decided. From October 15th through the day before the polls officially opened on November 2nd, the S&P 500 Index was -5.07%. During the same time period, the most widely used debt index, the Bloomberg Barclays US Aggregate Bond Index (‘the Agg’) was down almost half a percent at -0.46%. These results showed signs that the overall sentiment for investors was not positive on the near-term for our markets. Once the polls began to close and votes tallied it was clear that Election Day would be a pivot point for the markets.
It was clear there would not be a definitive winner of the election announced by the end of voting day, and this uncertainty in the next leader of the United States continued through the weekend as election workers arduously counted ballots in a handful of undecided states. By Sunday, there was enough clarity from the majority of the counted ballots that a winner of the US presidential could be determined and announced to the public with certainty. As the world was glued to the election news during the week, investor sentiment turned positive, with the S&P 500 Index gaining back 4.2% and the Agg up 0.5% from Wednesday November 4th – Friday, November 6th.
The beginning of the trading week presented the markets with news that added fuel to the growth fire – a COVID-19 vaccine in trial that was 90% effective.
This was what some had been waiting for since February, so the uptick in the markets was without a doubt driven by investors believing life is on the verge of normalcy. Yet, the struggle to return to said normalcy is still present, as the amount of cases and deaths are surging back to new records each day. But those who stayed the course with a sounds financial plan are reaping the benefits of an uneasy market. The S&P 500 Index is positive 6.82% in Q4 through November 15th, and is astonishingly up 12.77% year-to-date. While the Federal Reserve has promised to keep the Federal Funds target rate low for the foreseeable future, fixed income has proven to be a fruitful safe haven with the Agg positive 6.68% for the year through November 15th. As the year is quickly approaching its final chapter, we must remember to stay diligent in our wealth strategies, and of paramount importance is the need to remain diligent in our safety protocols.