Headwinds to Monitor in July Stock Market

June 29, 2020
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Investors may have to get used to volatility in the stock market this coming month. While Coronavirus is taking all the headlines, it’s only one of the factors influencing market movement today. For this week and the entire month of July, these are the headwinds that every investor should be aware of.

COVID-19 Infection Rates and Hospitalizations are Increasing

On Friday, the U.S. recorded over 45,000 new Coronavirus cases, the highest daily figure since the beginning of the pandemic. Texas and Florida are now hotbeds of viral activity. Hospitalization rates are increasing nationwide.

With testing capacity increased, higher numbers were expected, but increasing hospitalizations show that it’s not purely a statistical event. With more people getting sick, economic recovery could take longer than expected, which could limit bullish sentiment in the market.

Presidential Polling Will Influence Investor Sentiment

Former Vice President and likely Democratic Candidate Joe Biden is leading in polls against President Donald Trump. A change in the White House could mean limited continuity in economic policies.

Polls aren’t reliable and don’t guarantee anything for November, but they could change some investor behaviors, leading to increased volatility.

The July 4th Weekend Will Limit Trading This Week

This week is likely to be volatile because it’s a shortened trading week. The July 4th holiday will be observed by the markets on Friday. Historically, shortened weeks are more volatile by nature. Investors may want to avoid making major portfolio changes until stocks stabilize early next week.

With a new month and the beginning of a new quarter, large funds are more likely to adjust their portfolios in the coming weeks. Investors should be on the lookout for big movements in the larger growth stocks. Next week could present some interesting opportunities.

Congress Is Hitting Walls on Stimulus Measures

Lawmakers are still debating small-business and individual taxpayer benefits that could stimulate the economy during the ongoing Coronavirus Pandemic. The White House has expressed support for the second round of aid, but there’s no real consensus in Congress yet.

The House suggested a $3 trillion package last month, but this only set off more discussions in the Senate. If there’s bipartisan support for continued stimulus into next year, it could help to trigger a strong recovery.

Investors need to watch political developments closely because policy will directly influence how well America can recover from the health crisis.

Volatility Can Create Opportunities

Volatility can be unsettling, but price fluctuations also create opportunities. The peaks and lows can create buy and sell opportunities. Investors who watch the market closely will be primed to take advantage of the movement, whichever way it is trending.

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