COVID-19 & Your Finances News

Market Update: Big US Market Returns in August

September 22, 2020


Market Update: Big US Market Returns in August

COVID-19 & Your Finances News

August was another positive month for US, Canadian, and global equity markets. 

The US S&P 500 and NASDAQ indices each hit new record highs in August. For the fifth straight month, the S&P 500 climbed higher on the backdrop of positive employment data, the outlook for low interest rates, and the strong investor demand for popular  technology stocks such as the FAAMG stocks (an acronym for Facebook, Apple, Amazon, Microsoft, and Google).

On the employment front, the labour market has made significant gains with the US unemployment rate declining from 14.7% to 8.4% in August, a 43% improvement since April. The unemployment data was supported by lower jobless claims, which have been trending lower. Meanwhile, the Canadian labour market also showed improvements with the unemployment rate falling to 10.2% in August from 10.9% in July. 

For the balance of September investors are anticipating additional US stimulus to support economic recovery. Presently, the Senate has failed to pass the Republican-backed “skinny” coronavirus relief bill

Fall outlook

From our perspective, the current market sentiment is somewhat neutral.

We’re neutral because:

  • The Nasdaq Index and FAAMG stocks (an acronym for Facebook, Apple, Amazon, Microsoft, and Google) are seeing some profit taking and consolidation after unprecedented up-sized gains.
  • The uncertainty with the November US election could see global equity markets remain somewhat flat over the next couple of months as the fate of certain economic and political policies remain unknown. President Trump’s protectionist policies are a key concern, while Democratic candidate Joe Biden’s proposed corporate tax hikes viewed as negative for stocks. We expect any movement in the US stock market following the election results will be mirrored in global equity markets.
  • While the pandemic is ongoing, the global case fatality rate has declined since its peak in April. It’s uncertain, however, what will transpire heading into the flu season and how countries will handle rising cases. There are potential for re-lock downs.  

Model Performance*

Here’s how market trends affected CI Direct Investing portfolios this month:

ETF Portfolios

August 2020 performance1-Year performance
ETF Safety Portfolio+0.59%+4.58%
ETF Conservative Portfolio+1.12%+6.19%
ETF Balanced Portfolio+1.64%+7.38%
ETF Growth Portfolio+1.95%+8.13%
ETF Aggressive Portfolio+2.31%+7.96%

The composition of each portfolio and further information can be accessed by clicking the portfolio name.

Private Investment Portfolios

August 2020 performance1-Year performance
Safety Private Portfolio+0.81%+4.84%
Balanced Private Portfolio+0.78%+5.83%
Aggressive Private Portfolio+0.21%+1.94%

The composition of each portfolio and further information can be accessed by clicking the portfolio name.

*This is a hypothetical illustration of our portfolio performance as of the date noted above. The time-weighted performance is displayed in Canadian dollars and assumes daily rebalancing (unless otherwise stated) and the reinvestment of distributions. Private Investment Portfolios assumes monthly rebalance. It is reflective of the model portfolio’s target holdings and weights including portfolio changes. The performance is net of the management expense ratios (MERs); however, does not include CI Direct Investing’s management fee or taxes. Performance is annualized for all periods greater than one year.  This performance may differ from clients’ actual account return due to the timing of deposits, withdrawals, buys and sells, and the reinvestment of distributions. 

The performance provided is for informational purposes only and is not to be considered as investment advice. Portfolio performance is not guaranteed. The value of your investment can go down, up and change frequently. Past performance is not indicative of future returns. There may be significant differences between the investment portfolios that are not discussed here, including different investment objectives and risk factors. You should always consider, in any investment decision, your investment objectives, needs, circumstances, restrictions, tolerance for risk, financial goals and investment time frame.

Although CI Direct Investing believes the obtained information provided from third-party sources to be reliable, CI Direct Investing does not guarantee the information and disclaims any liability associated with the use of these performance results. Source: Morningstar Direct. For full details of calculation please contact: [email protected]

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