U.S. stocks indexes are on track for the best quarter in ages. The S&P 500 is up an encouraging 21.2% so far in the second quarter and is on pace for its biggest quarterly gain since the first quarter of 1975. Notably, it will be the first time since 1932 that Wall Street after bearing a drop of 20% or more in a quarter will bounce back with a 20% gain in the next, per Bespoke Investment Group.
But not just the broader market, the Nasdaq’s juggernaut rolls on, with the tech-laden index up a staggering 31.6% since the end of the first quarter, putting it on pace for its second-best quarter ever. And why not? Tech stocks like Apple, Microsoft, Amazon and Facebook scaled upward to an all-time high on Jun 23, and with tech bigwigs gaining, the Nasdaq can’t have a bad day.
Optimism on Wall Street about receding fears over virus and trade coupled with improving economic data helped the indexes stay on track for the best quarter on record. As business activity started to resume following easing of lockdown measures, another wave of coronavirus erupted across the United States. But Dr. Anthony Fauci, the nation’s top infectious disease expert, vowed to ramp up testing for the deadly virus. He also said that he is cautiously hopeful that a coronavirus vaccine may be developed by the year-end or early 2021, something that soothed investors.
On the trade front, investors initially were unnerved after White House trade advisor Peter Navarro said that the U.S. deal with China was “over.” Later, he clarified that he was talking about the lack of trust between the United States and China due to the coronavirus pandemic. Moreover, President Trump reassured that the deal with Beijing is “fully intact.”
Things are also looking much brighter on the economic front. HIS Markit’s preliminary composite index that measures both manufacturing and service activities, went up to 46.8 in June from 37 in May, indicating steady economic recovery.
In fact, May’s promising data for housing, jobs as well as retail sales report has already set the stage for economic recovery, which many economists had earlier doubted. New home sales in the United States increased 16.6% in May to a seasonally adjusted annual rate of 676,000, compared with estimates for an increase of 632,000.
The Bureau of Labor Statistics by the way confirmed that America regained 2.5 million jobs last month in contrast to economists’ expectations of job losses of 7.25 million. Separately, the unemployment rate came in at 13.3%, whereas economists anticipated the jobless rate at 19% versus April’s 14.7%.
Similarly, sales at U.S. retailers rose 17.7% last month, the biggest monthly jump ever. May’s retail sales figure easily surpassed analysts’ expectations of an 8.5% increase. Notably, retail sales account for just under a third of GDP and May’s rebound will invariably lead to an upward revision in second-quarter GDP.
It’s worth pointing out that the major indexes’ quick recovery has as well been fueled by the historic financial aid from the U.S. government and the Fed to combat the negative coronavirus impact on businesses and livelihood.
The government had approved more than a trillion-dollar relief plan that will directly benefit American consumers and business houses. The Fed, by the way, has 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 Stocks to Buy for Relentless Rise in Q2
Given the aforesaid positives, investing in some of the stocks that have so far not only made the most of the second quarter but are also poised to gain further seems judicious. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Microvision, Inc. MVIS develops information display and related technologies that allow electronically generated images and information to be projected onto a viewer's eye. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 40% over the past 60 days. The company’s shares have gained a whopping 894.3% over the past three-month period. It’s expected earnings growth rate for the next quarter is 80%.
Veritone, Inc. VERI is an AI company. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 7.7% up over the past 60 days. The company’s shares have gained an enormous 661.2% over the past three-month period. It’s expected earnings growth rate for the next quarter is 48.8%.
Remark Holdings, Inc. MARK primarily focuses on the development and deployment of AI-based solutions for businesses and software developers. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 60.4% north over the past 60 days. The company’s shares have gained a superb 515.3% over the past three months. It’s expected earnings growth rate for the next quarter is 50%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Novavax, Inc. NVAX is a specialty biopharmaceutical company. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has been raised 78.5% over the past 60 days. The company’s shares have gained a stellar 361.2% over the past three-month period. It’s expected earnings growth rate for the next quarter is 108.7%.
DCP Midstream Partners, LP DCP is a midstream master limited partnership that gathers, treats, compresses, processes, transports and markets natural gas and natural gas liquids. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved more than 100% north over the past 60 days. The company’s shares have gained an outstanding 303.6% over the past three months. It’s expected earnings growth rate for the next quarter is 107.7%.
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