Expected stock market trends for Q3 2020

The first half of 2020 has been one of the most stressful for many investors in recent times. The COVID-19 pandemic has caused the market to hit multiple all-time daily lows, which can be scary for investors to see. The nation is still reeling from the initial shock of the pandemic, but as we continue to push through it, we are seeing the market grow more stable.  

Stock market trends you might see in Q3 of 2020

In mid-June this year, the market began to see hopes of growth as the unemployment rates dropped. The Dow Jones fluctuates on a daily basis but it is generally trending upward. The S&P 500 has seen multiple +/-4% moves in the second half of June, which is a notable drift from the 3.2% averaged from 1928-2019. This indicates that it is evolving at a rapid pace that appears to be favorable for investors. 

However, stock market trends involve more than looking at current points and trying to guess what will happen tomorrow. We need to take national and global economic factors into consideration when predicting trends in Q3. Some stock market trends you might expect to see include:

• Stability among investors — The U.S. economy’s initial shock reaction to the COVID-19 pandemic appears to be over. The 2020 recession was driven by the scare of the virus unlike recessions in the past that were related to economic issues. As the market begins to recover, you might expect to see it restabilize and continue to grow as it had been prior to the pandemic.
  
• Increased value versus bonds — As of July 2020, bond yields are going down but their prices are going up. Because of this, investors are seeing more value in stocks versus bonds, which might contribute to the health of the market in Q3.
  
• Second virus wave complications — A vaccine for COVID-19 will likely not arrive until late 2020 or early 2021. The nation is at risk for another wave of infection during the fall and winter seasons in which people are more susceptible to illness. Along with a second wave of the virus and a further burden on our health care system and our workforce, the market can react in unpredictable ways. However, since we have already been through one wave, the nation might be more prepared for how to react during a second.
  
• International tensions — The relationship between the U.S. and China has been tense in recent years, and the COVID-19 crisis has driven the wedge between our two nations even deeper. The market could fluctuate in unpredictable ways should that divide continue to drive deeper. 

Talk to a ProVise CFP® professional about making wise investment decisions

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We take the time to get to know you, your current financial circumstances, your goals, and the beliefs that drive you so we can help you make decisions that work best for you. Using what we learn about you in combination with our skills in navigating the financial landscape, we can draft a written plan for you at a fiduciary standard of care. 

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Are you ready to talk to a professional about investing in the second half of 2020? Contact ProVise today to schedule a complimentary consultation.