The market continued to move higher in the third quarter despite continued negative news of increasing COVID-19 cases globally and sustained protests around the world. Companies scrambled to find a vaccine with multiple clinical trials currently underway. It is expected that the majority of vaccines will be available in 2021. Tension between China and the USA escalated as the Trump administration banned TikTok and WeChat and ordered ByteDance, the Chinese owner of TikTok, to sell its operations to a US company, citing national security concerns. This sparked a flurry of speculation around who might acquire TikTok’s US assets, which ultimately ended with an agreement between Oracle and Walmart but not a sale. Joe Biden announced Kalama Harris as his running mate for the November Presidential election. Concerns around the election outcome have increased as Trump has stated that he would not commit to a peaceful transfer of power and as budget cuts to USPS threatened mail-in voting. The Fed has left rates unchanged and indicated that they will likely remain near zero until at least 2023, noting that they will tolerate periods of higher inflation as they try to revive the labor market and economy. We finished out the quarter with the passing of Justice Ruth Bader Ginsburg and a renewed fight for a Supreme Court nomination and with Trump testing positive for COVID-19.
The Nasdaq Composite continued its climb in the third quarter, despite its September reversal, ending the quarter up 11.23%. The S&P500 and the Dow Jones Industrial Average returning 8.93% and 8.22%, respectively, followed suit. Ten out of the eleven sectors in the S&P 500 posted positive returns during the period with Consumer Discretionary, Materials, and Industrials posting the largest increases with returns of 15.06%, 13.31%, and 12.47%, respectively. Large-cap stocks outperformed mid-cap stocks, which beat small-cap names but all were positive for the quarter. Specifically, the Russell 1000 Index’s 9.47% rise did better than the Russell Mid-Cap Index and the Russell 2000 Index, which posted gains of 7.46% and 4.93%, respectively, for the quarter. Growth stocks continued to beat their value counterparts, as the Russell 1000 Growth Index gained 13.22% compared to the 5.59% rise of the Russell 1000 Value Index over the same period. Bonds trailed behind all equity markets with long-dated US Treasuries returning 0.14% while US corporates did better with the Barclays Aggregate returning 0.62%. The US Dollar Index declined -3.60% for the quarter while gold gained 4.13% and oil gained 2.42%. Bitcoin followed equities higher returning 17.05% over the period.
The views expressed in this commentary reflect those of Miller Value Partners analyst(s) as of the date of the commentary. Any views are subject to change at any time based on market or other conditions, and Miller Value Partners disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results.
©2020 Miller Value Partners, LLC
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