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Second Quarter 2020 Executive Summary

Quarterly Executive Summary

Q2 saw the market evolve at breakneck speed, as the pendulum swung back nearly as radically as the previous quarter.  Encouraged by fiscal and monetary policy, the reopening of the economy, and evidence of progress in the fight against the COVID-19 pandemic (COVID-19 or the pandemic), all major indices finished the second quarter dramatically higher, posting the largest quarterly gains in decades.  The DJIA closed +18%, the S&P +20%, and the Nasdaq +31% for the quarter.   (Even so, only the Nasdaq is positive YTD.)   

What’s next?  While Q2 economic data was better than expected, we have yet to see how easily a $21 trillion economy can boot up following an unprecedented state of suspended animation, especially against a backdrop of social unrest, pandemic, and recession (and all during an election year).  With the reopening of economies, the stimulus packages, and the capacity for medical breakthroughs, we are optimistic for continued economic recovery into the second half of the year, although at a slow and perhaps somewhat choppy pace.  

These are unprecedented times, giving cause for both caution and optimism.  When unemployment swings from a near 50-year low to a 90-year high, and a 140-year market expansion collapses at a level not seen since the Great Depression, there is tremendous uncertainty.  

The speed and magnitude of continued economic recovery is dependent on several factors, including: 

  • COVID-19 infections, along with progress toward a vaccine/therapies and the government’s response (i.e., add’l shutdowns), will play a significant role in continued economic growth.   Federal Reserve Chair, Jerome Powell said, “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus.”  
  • Continued fiscal and monetary policy is expected to buoy the U.S. economy.  On the heels of the historic $2 trillion CARES Act, an additional stimulus package (expected to be > $1 trillion) is being finalized.  
  • Political and geopolitical uncertainties, including the upcoming election, deteriorating U.S.-China relations, escalating trade tensions between the U.S. and the EU, and pandemic-related disruption to global supply chains have the potential to impact market sentiment and the economic recovery.   

It's especially important during times of turbulence to stay the course and adhere to your long-term goals and objectives.  Unfortunately, market volatility and fear are part of investing.  We understand that these are unsettling times … together we can weather the storm.

“The years ahead will occasionally deliver major market declines –even panics – that will affect virtually all stocks.  During such scary periods, you should never forget two things: First, widespread fear is your friend as an investor, because it serves up bargain purchases.  Second, personal fear is your enemy.”   - Warren Buffett

Recent Economic Data: 

Gross Domestic Product (GDP).  The GDPNow model’s latest estimate (July 1, 2020) for real GDP growth (seasonally adjusted annual rate) in Q2 2020 is down an unprecedented -36.8%, with manufacturing declines weighing on investment & consumption.   (Of note … GDP was down -13% in 1932 during the Great Depression.). 

Unemployment.  The unemployment rate declined to 11.1% in June (down 2% from May and well below the predicted 32% at the start of the quarter. Improvements in the labor market reflected the continued resumption of economic activity curtailed due to the pandemic. 

Consumer Confidence.  The Conference Board Consumer Confidence Index, an indication of consumer attitudes and buying intentions, stands at 98.1, up from 85.9 in May but still well below pre-pandemic levels. 

Consumer Price Index (CPI).  The CPI for All Urban Consumers (CPI-U), a measure of inflation which shows “cost of living” fluctuations, declined 0.1% in May, on a seasonally adjusted basis.  For 12 months, the CPI-U increased 0.1% before adjustments.  

Earnings.  For Q2 the estimated earnings decline for the S&P 500 is -43.9%, revised from the March 31 estimate of -13.6%.  Citing COVID-19 uncertainties, more than 1/3 of S&P 500 companies (183) have withdrawn EPS guidance for Q2. 

Housing.  Privately-owned housing starts in May were up 4.3% from the revised April estimate, but 23.2% below the May 2019 rate.


June 30, 2020

Q2 Return







S&P 500




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Executive Summary Sources:












https://www.wsj.com/news/us July 2, 2020











The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’s view as of the time of these statements.  Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.