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“Markets Shudder On New Corona Cases”- Weekly Market Update June 26th, 2020




A new record spike in Coronavirus cases lead to a poor day for stock performance on Wednesday. The Dow was down 700 points and the NASDAQ snapped an 8-day win streak. The plunge was mainly due to the fact that the economy is reopening, despite no real stem in cases. Wednesday saw a new record high in cases, with over 38,000 people testing positive.

Investors are nervous that if cases start to get too out of control then it will lead to a second economic shutdown. The markets essentially react to COVID-19 news these days.

Let’s take a look at some major events that went down this past week.

The Anti-eCommerce Company

People love talking about eCommerce these days (us included). The companies who are good at it are dominating their competitors and companies who aren’t good at it want to get better. That’s why it’s so shocking to hear about one company that could not care less about eCommerce. That company is TJ Maxx.

The CEO recently came out and said that they won’t leverage eCommerce sales. This is surprising to hear at any point but especially during a pandemic. Their reasoning goes like this: TJ Maxx is a discounted retailer and they feel that people enjoy the feeling of the “treasure hunt”. Their customers get a kick out of visiting the store and finding a deal and that’s why 98% of their revenues come from in-stores.

They obviously took a hit when stores were forced to close but since stores have reopened they’re actually selling more than they were this time last year.

Sometimes it pays to take the road less traveled.

Online Gaming Is Killing It

It should be no surprise that video game companies are thriving with everyone stuck at home. Electronic Arts (the company behind Madden, Fifa, and NBA Live) had originally said that they expected sales to stay stagnant during the coronavirus. However, they recently readjusted that and said that sales were much better than expected.

Electronic Arts

Activision Blizzard

Nintendo

These are all gaming stocks on the rise so far this year.

Why the NASDAQ is doing so well

The one sector that the coronavirus, economic shutdown, and quarantine has been good for is tech stocks. Companies like Zoom, Shopify, and Fiverr (among others) have all been posting record highs because their business thrives when you work from home.

● Zoom - helps you video chat with people.

● Shopify - helps you set up an online store.

● Fiverr - helps you find (remote) freelance work.

The longer the coronavirus lasts, the longer tech stocks will rally. Subsequently, this is why the NASDAQ is the only index that is in the positive for the year.

This is because the NASDAQ is composed of mainly tech stocks like Amazon, Facebook, and Alphabet (they account for 40% of its value).

Facebook Protest

If you heard about people protesting Facebook, you might think that it was users demanding more protection over their privacy. That’s why we were a little surprised when we heard that it was other companies protesting Facebook ads. The companies are demanding that Facebook do a better job of limiting hateful or false claims on their site.

For context:

Earlier this month Facebook CEO Mark Zuckerberg came out saying that his company will refuse to ban any political ads, even false ones. They claim that they aren’t “purveyors of truth” and that people can essentially post what they want.

Now, there is a movement called #StopHateForProfit that has been organized by 6 organizations (The Anti Defamation League, the NAACP, Sleeping Giants, Color of Change, Free Press and Common Sense) to call for companies to boycott using Facebook ads.

So far Patagonia, REI, North Face, Upwork, and Vans are all companies that have agreed to boycott Facebook ads.

That’s it for this week -- Join us next week for another market update.


Securities and investment advisory services offered through NEXT Financial Group Inc. Member FINRA/SIPC. Sierra Ridge Wealth Management is not an affiliate of NEXT Financial Group Inc.

This material is not intended as an offer or solicitation for the purchase or sale of a security or an other financial instrument. Past performance does not guarantee future performance.

All the views expressed are those of Chris Simpson and not those of Sierra Ridge Wealth Management or NEXT Financial Group Inc. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.

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