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Third Quarter 2020 Market Report

Learning to Live with It

COVID-19 may not be going away soon, but that has not prevented the U.S. economy and financial markets from rebounding. Americans are learning to live with COVID. Progress has been incremental, but the nation is on its way to overcoming the biggest challenge we have faced since World War II.

This is true across all levels of society. Overall, Americans have shown a great eagerness to return to work following the spring lockdowns, and precautions to reduce the spread of the virus are becoming second nature. This has allowed the job market to rebound quicker than expected.

The medical community has found better ways to treat the disease, and headway toward a vaccine has exceeded expectations. As a result, a second round of lockdowns, which seemed all but assured just a few months ago, now appears less likely.

The public sector also has adapted to the crisis. The Federal Reserve and Congress implemented “shock and awe” stimulus in March and April to bridge the economy to the other side of the pandemic. We expect more stimulus will be made available, if needed (although political turmoil in Washington D.C. remains a risk in this regard).

Finally, corporate America has found ways to overcome the COVID economy. Last quarter, profits for companies in the S&P 500 were 23% better than Wall Street analysts expected – a reflection of both too much pessimism among investors, as well as the resilience of American businesses. Meanwhile, applications for new small businesses have surged as entrepreneurs look for ways to reinvent themselves and capitalize on the evolving economy.

As Warren Buffett is fond of saying, it has always been a mistake to bet against America over the long term. We believe that to be true today, despite the multitude of challenges facing the country. It maybe along and uneven recovery, but the economy is growing once again. America’s resourcefulness should keep it that way.

To quote Pittsburgh-born actor Jeff Goldblum’s character in the 1993 film Jurassic Park: “Life…finds a way.”

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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