Markets Rally Back Despite Pandemic

The slogan of the day should be that “you just can’t
get a super-charged economy down.” In the face
of a resurgence in the first wave of the coronavirus
pandemic, many stocks charge ahead.

The pandemic has created winners and losers for sure
as some sectors have been decimated and others were
tailor-made for this new normal.

A couple of days after the fourth of July, the
Nasdaq Composite Index saw a record intraday
high at 10,369.05. On July 21, the Nasdaq Composite
hit another intraday high of 10,680.36, after dropping
0.8 percent.

This drop in the Nasdaq was after shares of Amazon,
Netflix, Facebook, Google and Apple were all off that
day after rallying 2.6 percent month to date. Investors
took some profits.

The tech rally had also pushed the S & P 500 back
into positive territory. The S & P 500 Index had dropped
from its peak in March by 34 percent in early April. At
the end of 2019, the Index sat at 3,230.78. By July 21,
2020, it had made gains and was back to 3,257.30.

With many tech stocks continuing to rally, the
inevitable comparisons to 1999 and the tech bubble
have been mentioned. At that time, the tech sector was
very over-valued and valuations showed that investors
were not paying attention to the fundamentals. That
does not seem to be the case today as many tech
companies are thriving in the pandemic.

Looking for Good News

Every glimmer of hope has been noticed by Wall Street.
Besides employment numbers, the market is hanging on
any positive news about a vaccine. Also, treasury yields
do not offer much of an alternative.

The markets were also buoyed by the European
Commission’s decision to make a 750-billion-euro
stimulus package. Talks in Washington for another
coronavirus relief bill have also been welcome news
on Wall Street since the previous package provided
much-needed relief to the economy.

According to a U.S. Bureau of Labor Statistics news
release from July 17, 2020, “Unemployment rates were
lower in June in 42 states, higher in five states, and
stable in three states and the District of Columbia.”

The release went on to say; “In total, 30 states and
the District of Columbia had jobless rates lower than the
U.S. figure of 11.1 percent, 10 states had higher rates, and
10 states had rates that were not appreciably different
from that of the nation.”

The victims of the pandemic have been travel and
leisure businesses and stocks, airlines and cruise ship
companies. They have also been thousands of small
businesses that didn’t have the capital to survive.

On the other hand, there are segments of the economy
well-placed to benefit from work-from-home, isolation
and quarantine, therapeutic research and remote learning.

The tech sector has been a beneficiary of the pandemic in
many regards. Delivery services of all stripes have thrived.

Staying at home has meant more gaming and
streamed entertainment. It has also increased the use
of collaborative tools that allow for online meetings and
work communications. App downloads have skyrocketed
since February for Netflix, YouTube and WhatsApp.

The market has found winners and optimism, even in
the face of a global crisis. As China has moved on to other
emergencies and Europe is getting beyond the worst of
the pandemic, the market is still showing its confidence
in tech and its growing demand and pandemic-survival.

If late-stage clinical trials go well for some of the fasttracked vaccine candidates, the market will find new
winners and see light at the end of the tunnel.