Head of Investment Strategy at Citi Personal Wealth Management Shawn Snyder joins Yahoo Finance’s Seana Smith to discuss the latest market action amid volatility surrounding the coronavirus crisis.
SEANA SMITH: I want to bring in Shawn Snyder, head of investment strategy at Citi Personal Wealth Management. Shawn, let's just start with the gains that we've seen for the month of April so far. What do you think of the rally?
SHAWN SNYDER: I think it makes sense, and it's not just April. April is looking like it's going to be the strongest performance on a monthly basis since, I believe, January 1987. So you know, like we've gotten all accustomed to saying the word, unprecedented-- we're seeing gains that are sort of unprecedented too. That said, it's not just April. Since March 23, we're up about 30% on the S&P 500-- very much looks like a V-shaped recovery in stocks.
So it is a little bit divorced from the economy-- still seeing really bad economic data. We saw this morning jobless claims rising again, but stocks have really looked past it. I think there are a few reasons for that. One reason is that stocks move on stimulus almost immediately, whereas the economy takes about a year or so to respond. And then beyond that, the simple composition of the stock market is more resilient than the economy in many ways, because you have these large tech companies and health care companies that, in some cases-- health care for an obvious reason-- but technology kind of benefits from social distancing, rising cloud computing, many, many other things-- just even having access to personal data to do contact tracing. And they make up a large portion of the S&P 500. So it is more resilient than the economy for good reasons.
SEANA SMITH: Shawn, what are you telling your clients at this point? You're saying that there could be some attractive opportunities within technology, but is now a good time for investors to put their money to work?
SHAWN SNYDER: So I'll answer that in two parts. We're telling our clients to focus on what we call the core of America and the future of America. It's sort of a barbell approach. So you think of right now the large demand for toilet paper, groceries-- food and staples retailers are doing quite well in this environment. That's what we would call the core of America, and then also health care, again, for obvious reasons-- and then the future in America-- like I mentioned, technology companies. So those are areas that we're focused on.
Is it too late for clients to get into a market? I would absolutely say, no-- particularly if you're a long term investor. If you have retirement coming up near term, then you're going to want to take less risk. But I think if you're a long term investor, I don't think that it's ever really too late to get in. But what I would recommend is that you maybe go in in stages at this point. Maybe you put in a little bit now, a little bit more a month from now. And by doing that, you can kind of reduce your risk if you do see a pullback in the market with a second wave of infections or some sort of business default that spooks the market a bit. That can help you enter the market but take on a little bit less risk when you do it.
SEANA SMITH: And, Shawn, real quick-- what do you think of earnings season so far? Because even though these numbers-- if we were to compare that to what we thought we were going to get a couple of months ago, obviously they're extremely weak. But I think many investors, many people on Wall Street were expecting these numbers to be a lot worse. What do you think?
SHAWN SNYDER: Right. So I think earnings season has been OK. I think we have seen better performance from some of the technology companies. But in a lot of ways, I don't actually think it's about the earnings. I think you can kind of look at-- this is on the economic side of things-- but you can look at China and Italy as sort of canaries in the coal mine here. And if you're not familiar with the term, miners would bring canaries in the coal mine, they would warn them if there was hazardous gas in the mines.
So China and Italy went through lockdowns first. They were also the first ones to reopen. So we can watch the data there to see what might potentially happen in the US. Obviously, the US is not China. We know that. But we did see data from China actually rebound pretty sharply on the manufacturing front, whereas on the services side, it's been slower to respond.
So we'll probably see a similar pattern here, where we get a V-shaped recovery in certain sectors. You think of New York Governor Cuomo talking about opening up construction and manufacturing first on May 15-- the reason for that is it's easier to do-- whereas the services sector is not going to look like a V-shape. It might look like what, if you're an economist, you'd maybe call it a reverse-J, where you have a sharp decline, and then a more gradual modest recovery.
As I mentioned earlier to someone I was talking to, it's hard to have a social life when you're socially distant. And so it's going to take longer to recover, but I do think something that is maybe positive signs, we're actually seeing a rise in demand for cosmetics in China. So people care what they look about again. People are buying barber shears online. So I do think people are kind of preparing to go back about their lives.
SEANA SMITH: Well, I hope so. That's an optimistic tone there to end on. Shawn Snyder, thanks so much for joining us this afternoon.
SHAWN SNYDER: Thank you, Seana.