The first half of 2020 was a wild ride, whether you\u2019re\nlooking through an economic, public health, social, or market lens. For the\nstock market\u2019s part, equities defied most expectations and are nearly flat for\nthe year even as the economy remains mired in uncertainty. Many investors are\nwondering what to expect in the second half. Here are four key factors to\nwatch:<\/p>\n\n\n\n
1. The Shape of the\nOutbreak Matters, but Expectations Matter More<\/strong><\/p>\n\n\n\n Reports in the U.S. point to rising cases, particularly in\nparts of the country that had once skirted the worst of the outbreak. The reach\nand pace of the outbreak remains a key risk in the current environment, but at\nthis stage the biggest risk for markets is the risk of another economic shutdown.\nWe are by no means advocating for or against a lockdown \u2013 our view is simply\nthat another lockdown would almost certainly result in another major pullback\nfor stocks.<\/p>\n\n\n\n As the outbreak unfolds and perhaps worsens, look for\ninvestor sentiment to anchor negative headlines. As expectations fall and fear\nrises, the economic recovery will have an increasingly lower hurdle to clear \u2013\nand that could be good for stocks.<\/p>\n\n\n\n ______________________________________________________________________________<\/p>\n\n\n\n How to Use Market Volatility to Your Advantag<\/a>e<\/strong><\/p>\n\n\n\n Current market volatility is challenging for just about\nevery investor, especially with all the unknowns that come with the current\npandemic. But for all the worry and discomfort volatility often causes, did you\nknow there are also several positive aspects of volatility?<\/p>\n\n\n\n If you have $500,000 or more to invest, get our free guide,\n\u201cUsing Market Volatility to Your Advantage\u201d and learn our insights, based on\ndecades of experience, about how a volatile market may be able to actually help\ninvestors refine their strategies and potentially generate solid returns over\ntime.<\/p>\n\n\n\n You\u2019ll get our ideas on:<\/p>\n\n\n\n Download Our Guide, \u201cUsing Market Volatility to Your Advantage\u201d<\/a>1<\/a><\/sup><\/strong><\/p>\n\n\n\n ______________________________________________________________________________<\/p>\n\n\n\n 2. More Economic\nStimulus as a Tailwind<\/strong><\/p>\n\n\n\n The Federal Reserve Chairman, Jerome Powell, has been vocal\nin recent weeks about his view on more economic stimulus: the U.S. economy\nneeds it. Earlier in June, the Treasury Secretary echoed this sentiment,\ntelling the Senate Small Business and Entrepreneurship Committee that he thinks\nthe U.S. \u201cdefinitely\u201d needs more stimulus. House Democrats have already passed\na $3.5 trillion version of another stimulus package, but Senate Republicans are\nso far resisting any stimulus package greater than $1 trillion.2<\/sup> <\/p>\n\n\n\n Either way, it appears at this moment that the U.S. economy\ncould get more stimulus in some form in the coming months, and any stimulus is\nlikely to play as further support for stocks, in our view. <\/p>\n\n\n\n 3. Valuations That\nSeem High Can Go Higher<\/strong><\/p>\n\n\n\n With the forward P\/E of the S&P 500 at over 20, stocks\nmay seem highly valued. But one factor investors should consider in the second\nhalf of the year is the role of interest rates on valuations. When interest\nrates are basically at the zero bound, the future value of earnings is higher. That\nmeans that valuations that once seem expensive at 20x or 25x may actually have\nmore wiggle room on the upside, in our view. Traditional views of \u2018high\nvaluations\u2019 may need to be adjusted even higher. <\/p>\n\n\n\n 4. How Messy Will the\nElection Get?<\/strong><\/p>\n\n\n\n We are politically agnostic at Zacks Investment Management \u2013\nwe do not prefer one party or leader over another. What matters to us is how\npolicy changes may alter property rights or serve as headwinds or tailwinds for\neconomic growth. The stock market and economy tend to be more resilient than\nany one political party, but policy ultimately does matter. <\/p>\n\n\n\n In 2020, we see more risks than a typical election year, for\nmyriad reasons. The pandemic looms as a factor in voter turnout, and the\ntemperature of the country (no pun intended) is on the rise. A messy and\/or disputed\noutcome could be a short-term risk for stocks, and volatility in the weeks\nsurrounding the election should be expected. <\/p>\n\n\n\n It may be hard to find the silver linings in the current\ncrisis, but that doesn\u2019t mean they aren\u2019t there. To help give you additional\ninsight into how you can make the most of turbulent times, I recommend reading\nour guide \u201cUsing Market Volatility to Your Advantage.\u201d4<\/sup> This\nguide can help you learn about our insights, based on decades of experience,\nabout how a volatile market may be able to actually help investors refine their\nstrategies and potentially generate solid returns over time. If\nyou have $500,000 or more to invest, download this free guide today by clicking\non the link below.<\/p>\n","protected":false},"excerpt":{"rendered":" The first half of 2020 was a wild ride, whether you\u2019re looking through an economic, public health, social, or market […]<\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-8732","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8732","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8732"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8732\/revisions"}],"predecessor-version":[{"id":10576,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8732\/revisions\/10576"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8732"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8732"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8732"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nYou\u2019ll get\nour ideas on:<\/p>\n\n\n\n