Market News - Fall 2020 - Kris Carroll, Carroll Financial
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October 30, 2020

Market News – Fall 2020

Fall 2020 Quarterly Newsletter

Author: Kristopher W. Carroll, CFA®, CFP®

The third quarter of this year continued to be a roller coaster ride in the equity markets leaving many investors wondering about what’s next. We won’t pretend to know how the markets will perform in the fourth quarter of 2020. This has proven to be a challenging and uncertain time for all of us as individuals and as investors. However, we do think that there are some obvious things to watch out for in the fourth quarter.

The election is maybe the most obvious event. Depending on the outcome, we may see some significant tax changes in 2021. We also continue to keep a keen eye on all the employment data. Thus far employment seems to be returning faster than expected, but we believe that it may take a very long time to reach the historically low levels of unemployment that preceded the COVID-19 crisis. We think retail sales in the fourth quarter will warrant added attention. There is some concern that this crisis may affect consumer behavior more than other recessions. One bright spot we will continue to watch is housing data as new mortgage applications are actually up 22% according to the Mortgage Bankers Association.

2020 markets have certainly picked winners and losers this year. Information technology as a sector is up 29% compared to the worst performing sector energy, which is down 48%. REITs, particularly those specializing in retail space, have had an abysmal year ( -41%) as well as banks (-35%) and the travel industry (-45%). Despite these challenges, most major indices finished the third quarter of 2020 up for the year. This is on the backs of large technology stocks. The top five stocks in the S&P 500 currently account for 22.6% of the index. Compare this peak to the previous high of 18% in 2000, the largest companies are certainly driving the index performance.

We know that 2020 has presented unique challenges to our clients and their families. If there is any way that we can help, please let us know. We will continue to watch over the nest eggs that you entrust to us. In the meantime, we hope you and your family stay safe and healthy.

This article was featured in our Fall 2020 Quarterly Newsletter available here:

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