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Stocks and Sentiment Pressured Wednesday: What Wall Street’s Saying

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Stocks were mostly down Wednesday with the market leaders found in growth and defensive names. 

The S&P 500 fell 0.36% while the tech-heavy Nasdaq rose 0.15%. The 10-Year Treasury yield slipped to 0.74%. Yields fall when prices rise. 

Johns Hopkins data show the 5-day moving average of daily new coronavirus cases in the U.S. at 23,000, up from 17,000 a few weeks ago. This trend caused massive selling last week, but many now agree it may take actual lockdowns to severely do the market in at this point. Markets are also awaiting more stimulus, with many calling for more fiscal stimulus, as monetary stimulus is crucial but can’t provide much more upside to stocks, as the benchmark lending rate is near 0% and the Federal Reserve is pulling out all the stops on new bond-buying programs. 

Fed Chairman Jerome Powell did speak to the House Financial Services Committee Wednesday, offering not much of an update going forward on monetary policy. Recently, Powell has warned the economic recovery may not be speedy. 

Cyclical sectors lead the market down, as consumer discretionary, oil and bank stocks all fell between 1% and 3%. 

Investors were more interested in growth stocks, which can power through economic headwinds and defensive stocks, which are largely unaffected by those headwinds. 

The S&P 500 tech ETF  (XLK) - Get Technology Select Sector SPDR ETF Report, which is 40% weighted to Apple  (AAPL) - Get Apple Inc. Report and Microsoft  (MSFT) - Get Microsoft Corporation Report, rose just under a tenth of a percentage point. The New York Stock Exchange FANG Index rose 0.56%. The NYSE Healthcare Index rose 0.1%. 

Here’s What Wall Street’s saying: 

Kevin Phillip, Managing Director, Bel-Air Investments:

"Over these next 60 days, I believe the upside of the US stock market to be limited as the market has priced in earnings unlikely to be achieved until 2023 or a miraculous cure to the virus. We continue to have tremendous uncertainty: COVID-19, China Trade rhetoric, Presidential elections, future stimulus. We have significantly reduced US small cap as of this week, and rotated core equity exposure to health sciences to be more defensive if the market pulls back. I would add to the market if we see 15-20% downside. We regardless always maintain a core exposure to the market. We added stock exposure throughout the March declines believing the unprecedented downturn would have an unprecedented bounce; albeit this one’s degree still surprised me. We also used the downside volatility to create tax swaps generating tax losses while staying invested. As the market accelerated up over 20% from its lows, we started to trim.” 

Brian Levitt, Global Market Strategist, Invesco on Long-Term Investing: 

"Re-risking the portfolio, whether by dollar-cost averaging or by lump-sum investment, proved to be better than not investing. The lump-sum investment outperformed, climbing to over $400,000 by June 12 compared to $279,008 ($2,000 per month for 50 months), $320,995 ($5,000 per month for 20 months), $342,788 ($10,000 per month for 10 months) and $348,637 ($20,000 per month for five months). As usual, it is the time in the market that matters most. As investors, our nervous systems were triggered by detected danger. Dollar-cost averaging could be part of the plan to relax our bodies and return us to our long-term investment plans. It’s a fine approach. It just might not be the most advantageous."

Watch Clips From TheStreet's Interview with Dr. Fauci

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