October 2020

Clients & Friends:

September headwinds are common enough that the S&P 500’s descent from its September 2 all-time peak feels familiar amid an otherwise historic year. Despite this “September effect,” many economic indicators are brightening, suggesting a recovery that has slowed, not turned.

This loss of upward momentum comes after a strong run since the March sell-off, but as company valuations reached levels unseen since 2001, there were several indicators that they had reached stretched levels.

Technology, the highest-flying sector of the COVID-19 era, took one of the largest hits during September. But burdened by the resurgence of COVID-19 in Europe and the lack of another U.S. stimulus package, the downward movement spread across the market. Technology will have a chance to reassert itself with earnings reports starting at the end of the month.

Unquestionably, the tale of two markets and the “K-shaped recovery” continues. Some parts of the economy will flourish while others struggle. Meanwhile, political pressures – and the urging of Federal Reserve Chairman Jerome Powell – continue to push for Congress and the White House to find a deal on fiscal stimulus.

We have talked a lot about volatility, and that isn’t likely to change very soon. However, there will be opportunities for market improvement this month and in the months to come.

Here are some quick takeaways for the month:

  • September took the top off what had been a hot market leading up to the month. The dent in the armor for technology and other pandemic-era champions should be seen in this context.
  • Real gross domestic product is expected to have risen sharply in the third quarter, following a steep drop in the previous quarter. However, the overall level of activity remains below where we were at the end of last year.
  • Economic indicators suggest continued, if tempered, economic improvement.

Here at the end of the quarter, we can clearly see the gains made by the mainstream indices. The S&P 500 gained 8.47% of value and the NASDAQ saw an 11% rise since the June 30 closing bell, despite the September slump. And here’s where we stand on the year:


12/31/19 Close

9/30/20 Close

Year to Date

% Gain/Loss Year to Date











S&P 500










Russell 2000





Bloomberg Barclays Aggregate Bond





Performance reflects price returns as of market close on Sept. 30, 2020, except for the MSCI EAFE and Bloomberg Barclays Aggregate Bond, which reflect the Sept. 29 closing values

We hope this letter finds you well. It is never a great feeling when the markets correct, but as we know, long-term investing goals guided by pragmatism and context see beyond short-term fluctuations. We thank you for your continued trust in us as we navigate this time together. If you have any questions about the markets, your investments or your plans, please reach out to us so we can talk.


Carlie Dugan, CFP®
Managing Partner, Cornerstone Financial Partners LLC
Financial Advisor & Branch Manager, RJFS

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