Market Update: Wed, Jul 1, 2020 | LPL Financial Research


US stocks open slightly higher. Stocks in the United States reversed earlier losses and opened the new quarter in the green on positive early test results for a vaccine candidate, as investors digest a record second quarter of gains. It is a slow news day otherwise, as COVID-19 and the impact to the economy from potential shutdowns dominate conversation. Asia was mainly higher, although Hong Kong was closed, while Europe is down modestly.

What a quarter. The S&P 500 Index gained 20% in the second quarter of 2020 for the best quarter since 1998. Of course, it was down 20% in the first quarter, the worst first quarter ever, but the bounce back was quite impressive. All 11 sectors were higher for the first time since Q1 2019. Retailing, hardware, autos, and energy sectors led, while utilities, telecom services, and banks lagged.

Does a big quarter mean anything? Welcome to the third quarter, which is historically the weakest of the four quarters. Historically, the quarter following an S&P 500 rally of 15% or more hasn’t been lower since 1950, and it’s been higher eight of the past eight times. We take a closer look at this potentially bullish development later today on the LPL Research blog.

More signs of economic improvement. Consumers are feeling better, as the June Consumer Confidence Index soared to 98.1, much better than what economists expected. This continued a recent string of most economic data coming in well above expectations. Data out of China was strong as well, as the June manufacturing Purchasing Manager’s Index (PMI) came in at a three-month high and above 50, suggesting economic expansion.

A look at high frequency data. We take a closer look at the recent increase in US COVID-19 cases and how this may be affecting the real-time data points that we are monitoring to gauge the pace of the US economic recovery. Look for this on today’s LPL Research blog.

July 4 Holiday Schedule. LPL Financial and the stock and bond markets will be closed Friday, July 3, in observance of the July 4 holiday. Please note:

  • Client letter for July is available today.
  • Daily Market Update will distribute July 2 but not on July 3.
  • Weekly Market Performance blog will publish after noon ET on July 2; there will not be a morning LPL Research blog July 2 or any blogs on July 3.

COVID-19 news. On Tuesday new daily US cases rose 27% week over week to about 44,500, still a disheartening number, but the smallest weekly increase in two weeks. It was mostly explained by a 27% jump in tests to a new high of 648,000; the positive test rate stayed below 7%. Unfortunately, hospitalizations jumped by more than 1,600 Tuesday, the biggest daily increase in over two months (Source: COVID-19 Tracking Project).


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