Stocks recovered some ground last week, but September was the roughest month for U.S. equities since stocks began rebounding from bear market territory in late March. Below are a few quick takeaways on the September swoon, what may lie ahead, and how we are investing:
- Given the disconnect between Wall Street and Main Street, a correction wasn’t entirely surprising. In the spring, the question clients asked us most frequently was why stocks continued to drive higher, despite high unemployment and a clear downturn in economic activity.
The short answer was that fiscal and monetary stimulus boosted markets and gave hope that the economy would rebound quickly. In September, investors may have woken up to the reality that the economic recovery will be uneven, and economic activity and data will probably move in fits and starts. An impasse in Congress around additional coronavirus relief has raised additional concerns about the economic recovery.