| Stocks Down On Profit Taking Amid Worries Over The Coronavirus And Economy  Image: Bigstock Stocks closed lower yesterday with all of the major indexes down more than -2%. The Nasdaq also saw its 8-day winning streak come to an end.
But after more than a 40% surge in 3 short months, some profit taking was to be expected.
The same concerns that the market has been worrying about (but brushing off) for weeks, are the same concerns that finally pressed pause on stocks yesterday.
Concerns over an increase in coronavirus cases and what that could mean health-wise, and for the economic reopening, gave investors an opportunity to pull some profits. Granted, much of the increase appears to be commensurate with an increase in testing. And everybody knew there would be an increase in cases once we reopened. Nonetheless, worries over what that could mean for reopening plans in some areas is a legit cause for concern. But so far, nobody is talking about hospitals being overrun. Nor is anyone talking about locking back down.
That of course leads to economic concerns. Again, the reopening continues. We're seeing great pent-up demand virtually everywhere. And the economic reports we've been getting have been amazingly impressive. But worries are worries. And while the situation at present isn't hurting the reopening, what if it starts to, and what would that look like?
All of the above will be closely watched in the coming weeks.
In the meantime, as I mentioned yesterday, there's a growing buzz regarding another stimulus bill that could total as much as $1.5 trillion. The bill is said to be focused on jobs. But there are lots of ideas floating around, including sending checks to individuals, more small business loans, aid to states and municipalities, infrastructure, and more. The hope is that a deal can get done in mid/late-July.
For now, traders will be wrestling with the promise of reopening our economy and the risk of a further outbreak.
Gladly, our economy prior to the pandemic was considered the strongest in our lifetime. And that's why it's bouncing back so quickly now. That also means it's well positioned to handle any shocks and setbacks.
But if the expectations for unprecedented GDP growth in Q3, and more record growth in Q4 remain intact, it looks like there's a lot more upside to go.
One area that looks like it's set to gain traction regardless, is environmentally responsible investing, often called ESG (Environmental, Social, and Governance), which includes focusing on companies trying to reduce their carbon emissions/footprints, and other planet-friendly and social-friendly causes. This is an industry growing in popularity, especially with big institutional investors.
In fact, last year alone, big institutions poured over $20 billion into ESG friendly stocks and funds, nearly quadrupling that of previous years. And that number is expected to grow again this year.
And individual investors should take note, because where institutional dollars flow, big gains are likely to follow. To learn more about this increasingly profitable industry, be sure to read our latest commentary...
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