After a dismal March that squashed an 11-year-long bull market, Wall Street made quite a mark by completing its best 50-day rally on Jun 3.
Signs of economic recovery, vaccine hopes and a barrage of government stimulus buoyed major benchmarks. And with things looking up for the economy, investing in stocks poised to gain in the near term seems prudent.
A Great Day for Wall Street
Wednesday’s gains helped the Dow set a three-day winning streak. The blue-chip index rose 3.5% over the first three trading days of the month of June. The Dow has reclaimed the coveted 26,000 level on the day after it jumped more than 527 points or 2% to close at 26,269.89. The tech-heavy Nasdaq also registered gains on Wednesday and is just 1.58% below its all-time high.
Importantly, the broader S&P 500 finished at 3,122.87, highlighting a rise of 42 points or 1.4% on Jun 3. Wednesday’s gains helped the S&P 500 notch its best 50-day trading performance, up 37.7%. Simultaneously, the broader market index registered its first four-day winning streak since early February (read more: 5 Top Stocks Up 100%+ in May With More Room to Run).
And if history is any indication, the S&P 500’s 50-day rally indicates that there could be more gains ahead. According to LPL Financial, stocks have more or less soared higher in the six and 12 months following a 50-day rally. After crunching data going back to 1957, LPL Financial concluded that the average six-month return was 10.2% following a 50-day rally, while one-year return was 17.3%.
Moreover, signs that the economy is close to bottoming out should certainly help the stock market scale north in the near future. Both jobs and service data have shown signs of improvement despite the onslaught of coronavirus and civil unrest in American cities.
Economy Shows Signs of Recovery
According to the ADP report, private sector shed 2.76 million employment in May. But that’s pretty much below what economists had predicted. Many of them were expecting a job loss of 8.66 million. It’s worth mentioning that in April, private sector job losses surged to 19.56 million, a tell-tale sign that job losses minimized last month.
By the way, the pace of contraction in America’s service sector was faster than expected in May. The Institute of Supply Management said that its non-manufacturing activity index came in at 45.4 in May, up from 41.8 in April. Economists had expected the reading to increase to 44.0 in May. Lest we forget, any reading below 50 indicates contraction.
Along with such promising economic data, easing of lockdown measures that have been put in place to curtail the spread of coronavirus will certainly improve investors’ sentiments. At the same time, promising news on the COVID-19 vaccine front shall help the stock market scale higher.
Investors, in the meantime, are encouraged by indications of stimulus measures by government and central banks worldwide to pep up economic growth that took a beating due to the pandemic.
5 Best Stocks to Buy Now
With Wall Street putting up a 50-day rally amid signs of the economic slump bottoming out and history indicating further gains, investing in sound stocks that are poised to gain in the near term seems judicious. These stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AbbVie Inc. ABBV discovers, develops, manufactures, and sells pharmaceuticals. The Zacks Consensus Estimate for its current-year earnings has risen 14.2% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 19.8% and 12.3%, respectively.
Amkor Technology, Inc. AMKR provides outsourced semiconductor packaging and test services. The Zacks Consensus Estimate for its current-year earnings has moved 7.7% up over the past 60 days. The company’s expected earnings growth rate for the current and next year is 25% and 28.6%, respectively.
Calix, Inc. CALX provides cloud and software platforms, and systems and services required to deliver the unified access network. The Zacks Consensus Estimate for its current-year earnings has climbed 22.2% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 266.7% and 122.7%, respectively.
The Hain Celestial Group, Inc. HAIN manufactures, markets, distributes, and sells organic and natural products. The Zacks Consensus Estimate for its current-year earnings has moved 11.3% north over the past 60 days. The company’s expected earnings growth rate for the current and next year is 19.7% and 27.9%, respectively.
Acacia Communications, Inc. ACIA develops, manufactures, and sells high-speed coherent optical interconnect products. The Zacks Consensus Estimate for its current-year earnings has risen 16.7% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 27.4% and 14.8%, respectively.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
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