It’s certainly been a wild ride for stocks in 2020. Barely past the halfway point, the year has already brought the worst pandemic to hit the US in over 100 years, an unprecedented government-induced recession as much of the country was locked down, some stomach-churning market volatility, and massive, unprecedented stimulus from policymakers totaling several trillion dollars—that’s trillion with a “t”.

The dizzying volatility began in late February with the fastest-ever bear market decline (going back to the inception of the Dow Industrials in 1896). It took just 19 trading days for the Dow to close

The Bloomberg Barclays US Aggregate Bond Index posted a solid total return of 2.9% in the second quarter of 2020, its eighth consecutive quarterly gain, and a relatively strong quarter for the broad investment-grade bond index considering the outsized stock market gains over the quarter.

The index is up slightly more than 17% over those eight quarters, the best two-year stretch since 2010. As shown in the LPL Chart of the Day, more economically sensitive sectors (high-yield corporates, bank loans, emerging market debt) led in the second quarter of 2020, but even Treasuries advanced and investment-grade corporate bonds held their

2020 is an election year, and as we get closer to November, we expect this to replace COVID-19 and the recession at the top of investors’ minds. The makeup of Congress may influence stock market performance, and how stocks and the economy perform prior to the election may forecast who will win.

The Makeup of Congress Is Very Important

Although all election years feel different, 2020 no doubt may be one of the most unique election years ever. We have a pandemic, a deep recession, extremely heightened partisanship, a mail-in ballot controversy, an unpredictable president, and the oldest presidential candidate ever.

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Following the massive beat in May nonfarm payrolls, many wondered if last month’s job gains pulled forward hiring ahead of the expiration of the Paycheck Protection Program to ensure small business loans were forgivable. Recall that the US labor market added 2.5 million jobs in May (revised up to 2.7 million in the June report) versus Bloomberg consensus expectations for a loss of 7.5 million jobs.

The June report helped put those concerns to rest, as the US economy added 4.8 million jobs, surpassing Bloomberg’s median consensus estimate of 3.2 million. As shown in the LPL Chart of the Day, nonfarm payrolls have been