November 9, 2020
The Dow Jones Industrial Average, S&P 500 Index and NASDAQ Indices all suffered their worst weekly losses since March to end October, resulting in all major U.S. large cap equity indices registering negative returns for the month. Concerns over a slowdown in global growth driven by failed attempts at U.S. fiscal stimulus, increasing coronavirus cases in the U.S. and Europe, a return to lockdown measures in Europe and mounting uncertainties over the U.S. election all contributed to the late-month sell-off in global equities.
While equites will likely remain volatile in the short-to-intermediate term in what is a highly complex investment environment, we remain positive over the intermediate-to-longer term as the economy has been resilient and progress on a vaccine continues. Most experts are expecting a vaccine to be widely available within 12 months. Monetary policy also will remain accommodative and U.S. fiscal policy will likely remain stimulative, although with the Senate appearing to remain under Republican control, the magnitude of fiscal stimulus will likely be more targeted and smaller than what was previously being discussed under a “Blue-Wave” election scenario. While governments have understandably tightened virus restrictions to control the latest surge in COVID cases, they are unlikely to return to the extreme measures taken in March.
Although equity markets initially responded positively to the U.S. election of November 3rd, we anticipate significant volatility in weeks ahead. Several election races (particularly in the U.S. Senate) are still in flux, creating near-term uncertainty around tax and fiscal policies. In addition, COVID19 infections have been intensifying and more state by state restrictions are looming, but we remain hopeful of positive vaccine developments as trials proceed. Against this backdrop, diversification, growth, valuation discipline, and quality remain the key elements of our investment strategy.
Sit Investment Associates will continue to operate at the highest level during this outbreak, and we invite you to contact us with questions or concerns. You can reach us at 612-332-3223 or email us at firstname.lastname@example.org. We will continue to post updates about market and economic developments on our website at www.sitinvest.com.