Last week started with optimism over a possible COVID-19 relief package and progress on medicines to combat the virus. The markets responded in turn with solid gains. However, by Tuesday that optimism faded as two high profile clinical trials, one for a vaccine and another for a treatment were both halted. Negative news on a relief package reemerged as well and the markets turned negative Tuesday, Wednesday and Thursday. Optimism returned on Friday and the markets ended the day mixed. While there was much movement day-to-day, the week as a whole ended close to where it started, with the major indices modestly higher.
The same few news stories seem to be moving the markets week over week. A recent article from Invesco titled “Five questions we’re hearing from investors” offered the following perspective regarding market movements and current events:
“It may be reassuring to know that the tension between short-term noise and long-term fundamentals is nothing new. The economist Benjamin Graham (1894-1976) once said that stocks are like a ‘voting machine’ in the short run but a ‘weighing machine’ in the long run. In other words, over the longer term, stock prices reflect the measure of a company’s fundamentals, but over the shorter term they can reflect investors’ fluctuating emotional reactions to news flow, economic data, and even rumors. In election years, the ‘voting machine” atmosphere can be amplified given the daily (or even hourly) headlines about candidates’ policy announcements and polling results. And so investors today need to be even more vigilant about ignoring the noise and looking ahead to their goals, no matter how difficult that becomes.”
We couldn’t say it better!