A Review of the Year’s Third Quarter
July Was a Month of IPOs, Lifestyle Adjustments, and More
Today marks the beginning of the fourth quarter of 2020. The year has been filled with historic events that no one could have seen coming when it began. During the first two quarters of the year, Americans watched as a global pandemic and an economic recession unfolded. During the third quarter, the country settled into somewhat of a “new normal” of outdoor dining and face masks. Here’s a look back at some of the most important events on Wall Street and elsewhere over the past three months.
After COVID-19 cases spiked in many parts of the country in June, July was a month of pausing or rolling back reopening plans in a number of states. Despite these setbacks, markets continued to climb. The S&P 500 became positive for the year in July after it tumbled by over 40% from pre-pandemic levels in March.
A number of important earnings reports came out in July. Technology giants Amazon (AMZN), Facebook (FB), Google (GOOGL), and Apple (AAPL) all reported better-than-expected results. Investment banks like JPMorgan Chase (JPM) and Goldman Sachs (GS) also handed in surprisingly good report cards. Additionally, June was a big month for IPOs with companies like Lemonade and nCio making their public debuts.
August Saw Stock Market Gains and Natural Disasters
In August, the Dow gained 7.57%, its best August since 1984 when the index gained 9.78%. Similarly, the S&P ended August up 7.01%, the best August the index has seen since 1986. Apple (AAPL) made headlines in August when its valuation hit $2 trillion, making it the first US company to achieve this milestone. The company also orchestrated a four-for-one stock split at the end of the month.
While markets climbed, other headlines were less uplifting in August. The country dealt with a number of natural disasters, from the derecho storm in the Midwest to massive forest fires on the West Coast.
September Marked an Unconventional Back-to-School Season and Losses on Wall Street
Overall, September was a month of losses for the stock market, though a number of stocks saw gains yesterday, the last day of the month, as investors hoped for lawmakers to reach a deal about the next wave of COVID-19-related stimulus. Air carriers and cruise lines led yesterday’s rally.
September also marked an unconventional back-to-school season. A number of universities and K-12 districts began the semester online. Some schools resumed in-person learning and many college towns across the country saw COVID cases rise.
The US presidential election is also drawing nearer. President Donald Trump and Former Vice President Joe Biden faced off in their first of three debates earlier this week to round out the quarter. Heading into Q4, investors will be watching how the tight race in battleground states unfolds and how the outcome of the election will impact markets.
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American Workers Are Feeling the Burnout
The Need for a Recharge
It’s been more than half a year since the coronavirus pandemic set in across the United States. Many people are feeling exhausted after months of Zoom meetings, parenting their kids while working, and being stuck in the same place. A recent study by Mental Health America showed that 75% of workers are experiencing burnout and 40% say this feeling is directly related to the pandemic.
Mental health experts, business leaders, and economists agree that this collective fatigue at work could have far-reaching consequences this fall and heading into 2021. As Deidre Paknad, CEO and co-founder Workboard, a work management software company noted, “If your team enters 2021 exhausted and end-of-rope from 2020, they won’t have the urgency, creativity and resilience you need to have a strong year.”
The Lack of Vacations and Breaks During the Day
Even in ordinary years, many American workers underuse their vacation days. In 2019, the average worker earned 23.7 days of paid time off, but only used 17.2 of those days. This year, people are taking even less time off for a variety of reasons. A number of people do not feel safe traveling or visiting family. Many, concerned about job security and financial stability, feel that taking time off is risky.
Additionally, people are taking fewer breaks during the day while working from home. Workers are not commuting and virtual meetings are often scheduled back-to-back, because there is no need to walk to different physical locations. Though transition periods during the day sometimes cause hassle, they also allow space for people to reflect and recharge. The absence of this time during the day is contributing to many feeling mentally drained.
Companies Look for Solutions
A number of companies are recognizing the risk of burnout and are trying to respond. Some are blocking off unstructured, meeting-free time to give employees the ability to catch up on their own work or to tend to needs at home. Microsoft (MSFT) is adding a “virtual commute” feature to its Teams offerings, which will give people the opportunity to set goals in the morning and reflect at the end of the day. Many employers are also urging workers to take time off. In an August survey, 40% of employees said their bosses have encouraged them to take PTO, up from 25% in May.
Companies are going to great lengths to protect their employees’ physical well being by keeping them safe from COVID-19 infections at home. Data shows that workplaces also need to make a concerted effort to support workers’ mental health during what has been an exhausting and anxiety-provoking time for many.
Netflix Works to Gain Subscribers in Africa
A Stumbling Block for the World’s Largest Streaming Company
Netflix (NFLX) has become the largest subscription-based streaming service in the world. During the first two quarters of 2020, the company added 26 million new paid subscribers globally.
However, Netflix is struggling to gain traction in Africa after entering the market five years ago. The continent is home to over one billion people, but only 1.4 million of them are Netflix subscribers. In contrast, almost 20 million people in Africa subscribe to the African-based pay-TV service, MultiChoice Group Ltd.
Most Netflix customers in Africa are from the wealthiest segment of the population. Many people have limited access to broadband internet and can watch pirated media or content on other platforms more cheaply than Netflix content. The streaming giant is now working on a number of new strategies for reaching more subscribers in Africa.
Offering Cheaper, Mobile-Only Subscriptions
Netflix is testing a cheaper, mobile-only subscription in Nigeria. 4G mobile networks are expanding rapidly in the country, giving streaming companies the ability to connect with more viewers.
Netflix is charging 1,200 Nigerian naira, or $2.65, per month for its new service. Over 100 million people in Nigeria live on less than $1.90 per day, so the new subscription option may still be too expensive for many.
Creating Locally-Produced Content
Netflix is also creating more locally-produced shows that reflect the daily lives of people. The company has already seen success with “Queen Sono,” a show about a secret agent in South Africa, and “Blood and Water,” a drama set in Cape Town about a girl trying to find her sister.
The company is now working on comedy, reality TV, and content for children. The new shows are tailored to a variety of different cultures in Africa and are available in multiple languages.
As the battle for market share in the streaming industry wages on, investors will be eager to see how Netflix’s strategies in Africa play out.