For much of the week, cities across the nation saw civil unrest tied to the death of George Floyd. That unrest resulted in peaceful protests, occasional looting, and, in some sad instances, questionable police decisions. Looking at this situation through an objective lens is a challenging endeavor, but there are two factors to consider when thinking about the economic impact going forward. First, will small businesses in major urban areas – particularly those that were already struggling due to COVID-19 lock-downs – face another obstacle in returning to normalcy due to the protests? Second, will thousands of protesters gathering together in close proximity lead to a second wave of coronavirus cases? Time will tell.
In spite of all the turmoil and national heartache, stocks are continuing to climb. On a global scale, signs of an economic comeback are slowly becoming apparent. In Europe, prospects continued to brighten as the region reported a directional improvement in manufacturing data and hopes for a large new stimulus package in Germany took hold. In the U.S., the number of job openings in everything from retail to dental care is on the rise – a positive sign that many of the in-person, service- oriented jobs that were lost during the pandemic may be coming back.
In another good sign for the global economy, the price of oil is stabilizing. The use of public transportation is still largely at a standstill as social distancing measures continue. As such, auto sales in countries such as China are beginning to surge. It will be interesting to see if similar trends emerge in major cities here in the U.S.
As the market continues its march higher, the focus is slowly starting to shift from companies that benefited from stay-at-home trends to those more poised to benefit from the reopening of economies. In recent weeks, this shift has aided the stocks of companies in sectors such as manufacturing, industrials, and transportation – the same sectors that were hit the hardest when the coronavirus pandemic began. This pick-up in more economically sensitive areas is yet another sign that the market believes better days are ahead.
Stay safe and be well.
Market comments based on the S&P 500 index which is unmanaged and cannot be directly invested into. Past performance is no guarantee of future results. Investing involves risk and the potential to lose principal.