September 17 Weekly Market Update

While last week’s market pullback – largely driven by tech stocks – was challenging for investors, the market got back to its winning ways this week. The good news began Monday as large mergers were announced in the chip manufacturing, biotechnology and pharmaceutical industries. While all mergers happen for different reasons, this uptick in merger activity may be a sign that corporations are feeling confident enough in the economy to spend large sums of money.

Adding to investor optimism were continued hopes for a COVID-19 vaccine. The Trump administration stated a vaccine could be ready in a matter of weeks, and a top biosafety scientist in China said a vaccine injection should be available for public use as early as November or December. With many nations around the world still struggling to get the pandemic under control, pressure to get a vaccine to market before year’s end remains high.

Speaking of China, the recovery of the world’s second largest economy continues to accelerate. China’s control of the pandemic means its virus-related restrictions have been easing, leading to an increase in industrial production and consumer spending. While China’s recovery is a positive sign, it is still experiencing trade pressures from large partners such as Europe and the U.S.

Lastly, the Federal Reserve (Fed) met for the last time before the election this week. In light of everything that has happened economically this year, the Fed’s general tone has been rather dovish. Put differently, it is unlikely they will raise interest rates any time soon. As such, with rates potentially staying near historic lows for the foreseeable future, consumers and corporations should have rather cheap access to capital. Individuals will have access to low mortgage rates to either purchase or refinance a home, while companies can borrow money at low rates to grow their business, refinance debt and other value-added activities. With rates lower for longer, the recovery may continue.

Stay safe and be well.

_{Market comments based on the S&P 500, Dow Jones Industrial Average and NASDAQ Composite indexes which are unmanaged and cannot be directly invested into. Past performance is no guarantee of future results. Investing involves risk and the potential to lose principal.}

_{The information provided for general educational purposes only. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time and cannot be guaranteed.}