Unbalanced Recovery

Nicolet Wealth Management Market Update

Thank you for your continued confidence in Nicolet. As the COVID-19 pandemic continues to create uncertainty in our lives, we will work hard to provide you with timely insights on market and economic conditions.

The S&P 500 Equity Index, which includes nearly all of the largest publicly traded stocks in the U.S., continues to be extremely resilient despite growing uncertainty.  The equity market is now up over 45% from lows set in late March.  The five largest companies (Microsoft, Apple, Amazon, Facebook, and Alphabet) have all been beneficiaries, and now account for over 20% of the equity index.  These five companies have generated over 50% of the market’s return over the last year, led by Amazon’s +70% appreciation.

However, many stocks have not contributed to the bull market, as many companies continue to be negatively impacted from the COVID-19 outbreak and subsequent social distancing efforts.  The market is now flat year-to-date, essentially back to the same level in which the year started.  However, over half of the stocks in the S&P 500 are down more than 10%.  The smallest companies are on average down more than 20%.  Energy companies down around 40% and Financials down over 20% remain some of the worst hit sectors of the economy.

The ongoing but unbalanced recovery from the current pandemic-induced recession continues to cause great uncertainty and disruption to the employment market.  The surge in COVID-19 cases has once again caused businesses to close or reduce operations.  The number of U.S. workers who applied for unemployment benefits has begun to increase again after four months of declines, as seen in the chart.

Jobless Benefits chart

Recently announced economic data also showed that the U.S. economy contracted at a record rate last quarter.  Reported 2Q GDP contracted at an adjusted annual rate of -32.9% or down -9.5% from the first quarter.  As the economic recovery stalls, and previous fiscal stimulus programs are exhausted, focus once again turns to Washington.  Congressional leaders and White House officials are currently negotiating the next relief package.  An estimated $1.5 trillion focused on funding for states, municipalities, employment insurance, and more support for small businesses.

Continued aggressive monetary and fiscal support, a strong housing market, lack of inflation, and the potential for medical breakthroughs should provide support for the capital markets and a gradual improvement in economic activity absent a major second wave of infections.  We continue to evaluate the capital markets for opportunities and risks.  We will continue to maintain our disciplined long-term approach, and are prepared for a range of potential outcomes.  If you would like to discuss your account in more detail, please contact us at your convenience.

Nicolet Wealth Management


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Nicolet Wealth Management is a brand name that refers to Nicolet National Bank and certain of its departments and affiliates that provide investment advisory, trust, retirement planning and insurance services.

Nicolet Advisory Services, LLC, is an investment adviser, registered with the U.S. Securities and Exchange Commission, and an affiliate of Nicolet National Bank.  Nicolet Advisory Services, LLC recommends the brokerage and custodial services of TD Ameritrade, Inc., member FINRA/SIPC.  TD Ameritrade is not affiliated in any way with Nicolet National Bank or its affiliated companies.

Trust services are offered through Nicolet National Bank, a national bank with trust powers.  Trust services utilizes SEI Private Trust Company (SPTC) as its custody provider.  SPTC is not affiliated in any way with Nicolet National Bank or its affiliated companies.