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Market Watch Weekly | August 7th, 2020 | So Much for the Dog Days of Summer...

Erik Dekker - Aug 07, 2020
North American benchmarks posted large gains amidst a busy week of earnings and economic data. This week’s rally added to the biggest four-month gain in both the TSX and the S&P 500 since 2009.

North American benchmarks posted large gains amidst a busy week of earnings and economic data. This week’s rally added to the biggest four-month gain in both the TSX and the S&P 500 since 2009. It's no secret that the pandemic has caused widespread economic pain, and last week provided some clarity on the depth of the economic hole with the government-mandated shutdown in April resulting in a 9.5% decline in U.S. GDP in the second quarter (equivalent to a 32% annualized decline), the largest quarterly drop in GDP dating back to 1947.

Unlike past recessions, the shrinking of the economy was driven by a sharp decline in consumer spending, specifically in services, as consumers were unable to spend because they were under stay-at-home orders. Investment, exports, inventories and state spending all contracted, and only federal-government spending added to growth. The good news is that this historic decline (more than twice the magnitude of the 2008-2009 contraction) is now in the rear-view mirror - the recession has come and gone.

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