The S&P 500 fell 0.3 percent last week amid resurgent COVID-19 case numbers in the US.
A Reuters report over the weekend said that investors are showing “signs of trepidation”. It noted that “investors poured a net $24.5 billion into bonds, the third largest weekly inflows ever recorded, while pulling $3.8 billion out of stocks”.
“We are definitely concerned,” said Nick Maroutsos, Head of Global Bonds at Janus Henderson Investors. “I don’t think you can blindly buy assets.”
Jeffrey Gundlach, chief executive officer of Doubleline Capital, said that the equity market’s leadership and frenzied buying by retail investors “is classic bear market rally activity”.
Meanwhile, this week's economic reporting started on a positive note with China reporting on Monday that profits at industrial firms rose 11.5 percent year-on-year in June, the second consecutive increase and the quickest profit profit growth since March 2019.
However, in the US, with COVID-19 cases surging, economic prospects may be about to take a turn for the worse.
“The number of outright failures of U.S. small businesses in the first months of the coronavirus pandemic was comparatively modest, but the months ahead look far grimmer as cash balances dwindle, federal help expires, and the disease surges back,” a Reuters report on Friday said.
The report noted that after a spate of optimism in June, a National Federation of Independent Business monthly survey found 23 percent of respondents in early July said they’d be out of business within six months “under current economic conditions”.
“We anticipate states will roll back or delay reopening plans ... possibly turning even more temporary closures into permanent ones,” said Yelp vice president for data science Justin Norman.
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