June was a mixed month. The national reopening in May and June led to new viral outbreaks and a spike in new infections in multiple states. Surprisingly, though, both the economic recovery and financial markets did very well. As we enter July, the question of many minds is whether the medical situation will improve—and whether the good economic and market news will continue.

Last week was packed with economic updates, with results largely beating expectations. For the second month in a row, the headline job report came in far above economist estimates, supporting hopes for a faster-than-anticipated economic recovery. This week, the economic update front will be relatively quiet, with highlights on service sector confidence, the weekly initial claims report, and producer inflation.

The bad news this past week is that the medical risks are still rising. Outbreaks in several states, notably Arizona, California, Florida, and Texas, have continued to get worse. All have shown significant spikes in cases in recent days, and health care capacity is becoming a concern in some cities. Multiple other states have also seen expanded case growth, although not yet at the levels of those four. At the national level, as of July 1, the number of new cases broke above 50,000 for the first time, and the daily spread rate is now approaching 2 percent per day. Similarly, even as the number of tests continues to rise, the positive rate is also increasing. The breadth and magnitude of the outbreaks continue to increase the risk at a national level.

Today, I'd like to discuss the coronavirus, including its effects on the economy and markets. Over the past week, we had some bad news on the pandemic front. There were growing viral outbreaks in several states, and the national number of new cases broke the 50,000 per day level for the first time. Although the risks are certainly rising, the appropriate measures are being taken, and we can reasonably expect the outbreaks to peak and start to decline in the next couple of weeks.

June was a great month for the markets. In part, markets were reacting to progress on the viral front, with drops in the daily case growth rate and increased testing. They were also responding to the continued economic recovery. Millions of jobs returned, and consumer confidence bounced back. Of course, there were setbacks, with some states seeing an uptick in virus cases.

Right now, we seem to be seeing a disconnect between the rising case counts and the rising stock market. Yes, there was a bit of a pullback on the news that case growth was hitting a new high. But since then, the markets have started to bounce again, even as case counts continue to increase. I get many questions about this disconnect. Indeed, on the surface, it seems to make no sense. What is going on here?

This was a full week of economic updates, including reports on housing, consumer confidence and spending, and durable goods orders. May’s personal spending report was a highlight, as consumers showed they were willing and able to go out and spend once reopening efforts began in earnest. This will be another busy week on the economic update front, with reports on manufacturer and consumer confidence, international trade, and June employment.

Today, I'd like to discuss the coronavirus, including the economic and market implications. We’ve had some setbacks on the pandemic front this week, with notable outbreaks in Arizona, California, Florida, and Texas. Although we’re not yet seeing a national second wave, the risks are rising. Both the daily spread rate (now at 1.6 percent per day) and daily case growth (about 40,000 per day) have jumped from last week, in large part due to the four outbreak states. Despite this concerning medical news, the economic news was good. Layoffs continued to decline, while hiring continued to improve. Plus, with metrics like consumer confidence, consumer spending, and housing all showing signs of improvement, it appears the overall recovery remains well on track.

The bad news this past week is that the chances of a national second wave of infections are increasing as localized outbreaks in several states continue to get worse. The states in question are Arizona, California, Florida, and Texas, with the Carolinas also under pressure. All have shown significant spikes in cases in recent days. Multiple other states are also seeing expanded case growth, although not yet at the levels of those four. While the virus remains under control in many states, the breadth and magnitude of the outbreaks continue to increase the risk at a national level.

Brad here. One of the questions I have been hearing a lot recently is whether it still makes sense to invest in international stocks. Indeed, it is a good question. Here, Anu Gaggar, Commonwealth’s international analyst, provides a timely and compelling look at why international markets may still make sense in your portfolio. Thanks, Anu!