Investment Insights I Market Outlook & Investment News
August 1, 2020 Weekly Market Update. The S&P 500 Index gained +1.73% and the Dow Jones Industrial posted a slight loss of -0.16% on the week. The discounting mechanism nature of the equity markets continues to have stocks rise sharply in anticipation of future improvement on the economic and earnings front. However, a good part of the market run-up has been led by the top five stocks by market cap (Apple, Microsoft, Amazon, Google and Facebook), now make up nearly 24% of the S&P 500. That means 1% of the stocks—measured in simple, equally-weighted terms—now practically make up their own quartile in market cap terms. That is significantly higher than the prior 2000 peak of about 18%. The chosen method of getting capital working in this lofty valuation market for the firm is defined outcome ETFs where we capture certain percentages of the market rally upside while having loss buffers between -9 and -30%. Unemployment claims (1.4M) ticked up again and the annualized -32.9% decline in second quarter GDP far exceeded any prior reading. However, consumption rose +5.6%, a figure that was certainly boosted by the COVID-19 unemployment check of an extra $600 a week; that extra money is now expired going forward until Congress can reach a new agreement.
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