The second wave of the virus is here, but markets appear not to care. Investors are betting that higher infections do not translate into more fatalities. Perhaps the US is not so far from herd immunity after all. A recent spike in Covid-19 infections in Sweden has not caused deaths to rise, yet. The next two weeks will provide a big test.
Daily new infections for Covid-19 rose to an average of 54,410 between Wednesday and Friday, an increase of 29.5% over a week earlier. But the S&P 500 jumped 4.0% last week (markets were closed on Friday).
Investors may be focussed on the low death numbers – an average of 660 over Wednesday to Friday, and down 7.2% over the previous week. Yesterday was even lower – just 254.
The jobs data was encouraging in the US, although the number of permanent job losses rose again by 588k to 2.9m in June. This may, of course, have much to do with the ascendency of ‘tech’, with Covid-19 giving many companies the perfect opportunity to re-think their business model. The IT index hit new highs last week, and is now 2.5% above the previous peak reached on February 19th.
Summary
• The economic data has been positive
• FAANGs enjoy their own wave
• Tesla, the new normal
