Market Commentary – September 2020

In September equities finally took a breather after reaching all-time highs earlier in the month. As many were expecting, tech stocks led the decline as they have moved significantly higher over the past six months. We view this as a normal market correction and expect stocks to retest their early September highs. Going forward, the most prominent risks for markets are the upcoming U.S. presidential election on November 3rd and the COVID-19 situation, to a lesser extent. Generally, we expect markets to react positively to a Trump reelection and negatively to a Biden win, which is primarily driven by policy initiatives of each party. There has been much talk of the potential for a contested election and while it could be close, we do not expect a situation that spirals out of control. As an example, following a drawn-out recount in the 2000 U.S. presidential election, George W. Bush won Florida by 537 votes or a margin of 0.009%. From election day to inauguration day, the S&P 500 Index fell by 5.90%. While we do not anticipate a repeat of 2000, there is the potential for market volatility around the election and we will take advantage of any associated buying opportunities.