U.S. equities started the week on a decidedly negative tone. The combination of increasing COVID cases, stimulus deal pessimism, and overall election jitters have caused U.S. equities to have one of their worst days in a month. Given the ongoing battle of market headwinds and tailwinds, we continue to expect volatility to be elevated for some time, remaining one of our primary investment themes for the foreseeable future.
Looking at the negative market headwinds, the biggest concern remains the spread of the virus. Over the weekend, the number of COVID cases, positivity rates, and hospitalizations rose in both the U.S. and Europe. With the weather turning colder, investors are worried that these trends could stress hospitals and cause governments to again shut down economies. So far, we have seen France, Spain, Italy, and the United Kingdom either impose curfews or shutdowns in order to reduce virus transmission. As we witnessed in the spring, shutdowns have a clear impact on economic activity and corporate earnings. Case in point, a bellwether European technology company warned Sunday evening that its business would take longer than expected to recover from the damage of the coronavirus pandemic.
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Commentaries are published by Cetera Investment Management LLC, an SEC registered adviser owned by Cetera Financial Group. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.
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