U.S. stock indexes saw sharp gains in the month of May, with the Dow Jones Industrial Average surpassing the coveted 25,000 mark and the broader S&P 500 crossing the 3,000 mark for the first time in more than two months. For the month, the Dow and the S&P 500 saw a 4.3% and 4.5% gain, respectively.
Equities have defied the old adage “sell in May and go away,” which is pertaining to the stock market trend of best returns between Halloween and May Day, and a slump in investments during the May-October period.
So, what drove the markets higher in May? No doubt, easing of lockdown measures that have been put in place to curtail the spread of the deadly novel coronavirus has lifted investors’ sentiments. But most importantly, promising news on the COVID-19 vaccine front helped the stock market scale higher.
American biotech company Novavax, Inc. NVAX began its first human study of its experimental coronavirus vaccine on May 25, and expects preliminary results from the trial in July. In its Phase 1 clinical trial, Novavax’s coronavirus vaccine candidate NVX-CoV2373 that includes Matrix-M adjuvant has been helpful in boosting immune responses.
Once the Phase 1 trial is successful, Novavax said that the Phase 2 trial will begin in many countries, including the United States, and will assess immunity, safety as well as focus on COVID-19 disease reduction among a broader age range.
Pharma giant Merck & Co., Inc. MRK also announced that it has started work on a COVID-19 vaccine last week. What’s more, Moderna, Inc. MRNA reported positive results for its coronavirus vaccine trial last week. All 45 participants successfully developed coronavirus antibodies. Meanwhile, Moderna announced a 10-year partnership with Swiss contract drug maker Lonza to ramp up production of the experimental coronavirus vaccine.
Investors were also encouraged by further indications of stimulus measures by government and central banks worldwide to pep up economic growth that took a beating due to the pandemic.
The European Union is widely expected to announce a new fiscal stimulus package of 750 billion euros ($823 billion) in an attempt to protect the Eurozone economy that has been ravaged by the pandemic.
Of the total bailout package, 500 billion euros will be given as grant to member states and another 250 billion euros could be available in loans. Under the proposal, Italy, France and Greece will get 81.8, 39 and 22.5 billion euros, respectively. And in order to fund the bailout package, the European Union will borrow 750 billion euros from financial markets.
On the domestic front, U.S. Senate Majority Leader Mitch McConnell recently said that the Congress may need to pass additional stimulus measures as well. The Congress and the Fed had already taken substantial relief measures. The government has approved a more than a trillion-dollar relief plan that will directly benefit American consumers and especially small business houses. It will also help the struggling U.S. airline industry, which has taken a serious beating due to travel restrictions and cancellations.
The Fed, by the way, has already trimmed borrowing costs and pumped billions of dollars into the banking system to sustain the credit flow. Policy makers unanimously agreed to trim benchmark federal funds rate a full percentage point to a range of zero to 0.25%.
5 Top-Performing Stocks in May
From reopening of the economy, vaccine hopes to additional stimulus measures, the stock market climbed north in May. We have thus highlighted five best performers of May that have not only made the most of the aforesaid positives but also are poised to scale higher in the near future as well. These stocks, undoubtedly, flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Aileron Therapeutics, Inc. ALRN is a clinical-stage biopharmaceutical company that focuses on developing and commercializing a novel class of stabilized cell-permeating alpha-helical peptides. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 31.3% over the past 90 days. The company’s expected earnings growth rate for the current and next quarter is 30.8% and 46.4%, respectively.
Energy Focus, Inc. EFOI designs, develops, manufactures, markets, and sells energy-efficient lighting systems. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 40% over the past 60 days. The company’s expected earnings growth rate for the current and next quarter is 66.7% and 37.5%, respectively.
MicroVision, Inc. MVIS develops PicoP scanning technology to create high-resolution miniature projection. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 40% north over the past 60 days. The company’s expected earnings growth rate for the current and next quarter is 87.5% and 80%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mersana Therapeutics, Inc. MRSN focuses on the development of antibody drug conjugate for cancer patients. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has climbed 14.2% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 16.7% and 95.4%, respectively.
CymaBay Therapeutics, Inc. CBAY focuses on developing and providing therapies to treat liver and other chronic diseases. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 11.4% over the past 60 days. The company’s expected earnings growth rate for the current and next quarter is 34.3% and 42.1%, respectively.
In fact, shares of Aileron Therapeutics, Energy Focus, MicroVision, Mersana Therapeutics and CymaBay Therapeutics have soared 196.8%, 190.5%, 151.5%, 150.7% and 109.3%, respectively, over the past four-week period.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
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Merck Co., Inc. (MRK) : Free Stock Analysis Report
Moderna, Inc. (MRNA) : Free Stock Analysis Report
Novavax, Inc. (NVAX) : Free Stock Analysis Report
CymaBay Therapeutics Inc. (CBAY) : Free Stock Analysis Report
Energy Focus, Inc. (EFOI) : Free Stock Analysis Report
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Mersana Therapeutics, Inc. (MRSN) : Free Stock Analysis Report
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