D.A. Davidson: Economic Restart Paces Q2 Rally; We See Modest Second Half Upside

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The S&P 500 index gained 20.5%, including dividends, in the second quarter of 2020, reversing much of the Q1 decline as investor sentiment surged following unprecedented monetary and fiscal support from the Federal government and credible evidence that the U.S. economic downturn bottomed in late-April/early-May. Equity markets around the world rallied in Q2, as COVID-19 driven shutdowns ended, but U.S. markets led the way. Within the U.S., the Q2 total return of the Nasdaq Composite (led by technology stocks) and Russell 2000 (small cap stocks) were 31.0% and 25.4%, both outpacing the quarterly gain of the S&P 500. This reflected broad stock participation in the rally from the March lows, as investors began to look past expected earnings declines this year, concluding that U.S. economic growth would resume in the second of 2020 and support earnings growth in 2021. For the six month period ended 6/30/20 the S&P 500 remained down 3.1% year-to-date (YTD), and was down 7.8% from its all-time high in February, while the Russell 2000 was down 13.5%. The Nasdaq Composite was the standout YTD performer as the index established new all-time highs and delivered a first half total return of 12.7%.


D.A. DAVIDSON Market_Strategy_070220
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