For Immediate Release
Chicago, IL – September 29, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Intuit Inc. INTU, FedEx Corporation FDX and NetEase, Inc. NTES.
Here are highlights from Monday’s Analyst Blog:
U.S. Presidential Debate Looms Large: Global Week Ahead
In the Global Week Ahead, the first U.S. Presidential debate is the key global event.
The Biden-Trump debate likely steps in front of the U.S. nonfarm payroll report out on Friday. It is unusual to see the monthly jobs report eclipsed by a different event.
But the U.S. Presidential election on Nov. 3rd looms large.
Reuter’s journalist Noel Randewich wrote this on Sept. 26th—
“Some U.S. stocks could face more volatility next week as President Donald Trump and rival Joe Biden face off in their first debate ahead of a November election that betting services currently view as almost a coin flip.
“A strong performance in Tuesday's debate by Biden, who currently has a modest lead in betting odds and polls, might boost stocks related to global trade and renewable energy, while a perceived debate victory by Trump could benefit fossil fuel and defense companies.
“The first of three scheduled debates comes at a fraught moment on Wall Street.
“The S&P 500 has tumbled -10% from record highs in recent weeks as investors worry about a prolonged recovery from the coronavirus and uncertainty related to the Nov. 3rd vote, including the possibility of a delay in announcing a winner.”
Next are Reuters’ five world market themes, re-ordered for equities.
(1) Q4 Begins
An extraordinary year is shuffling into its final stretch and it’s packed with blockbuster events -- the race for a coronavirus cure or vaccine, a seismic U.S. presidential election and a possible no-deal Brexit that would end a 3-1/2-year-long UK-Brussels standoff with a bang.
Squaring the books after Q3 will be interesting too.
Markets have lost altitude lately, but top tech stocks, while some 20% off peaks, are still up 65% year-to-date. Chinese shares have leapt 13%, while a dollar that spent recent months slumbering could suddenly be heading for its best month since 2016.
(2) What of More Stimulus… and Vaccines?
By now we were meant to have resumed shopping, dining, traveling and commuting. Instead, regional lockdowns are returning, the global COVID-19 death count is marching toward a million and stocks are swooning.
All that has trained market focus on stimulus and vaccines. Governments from Canada and Britain to Thailand are stepping up on the former. The U.S. Congress is dithering over further relief, but the possibility of mass evictions and defaults in an election year may persuade lawmakers to break the deadlock.
As for vaccines, several companies are conducting final-stage clinical trials; any signs of their efficacy would likely boost sentiment.
The COVID resurgence has ended talk of V- or U-shaped bouncebacks. Without more stimulus or vaccines, the trajectory could end up looking like a W or even an L.
(3) Non-farm Payrolls for September on Friday
September U.S. jobs data, out on Friday, will be watched even more closely than usual over growing concern on lawmakers’ failure to agree on fresh fiscal stimulus to protect the economy. This will also be the final monthly gauge of the U.S. jobs market before Election Day on Nov. 3.
Analysts polled by Reuters expect payrolls rose 875,000, after growing by 1.371 million in August. Recent data, including weekly jobless claims, suggest a nascent economic recovery may be fading as the effects of the last fiscal stimulus wane.
Fed Chief Chair Jerome Powell on Thursday told lawmakers that fresh fiscal stimulus could make the difference between a continued recovery and a much slower economic slog.
But a new deal before the presidential election looks unlikely, dimming the prospects for stock markets already hurt by election uncertainty and concern about the economy. A weak payrolls number could add to the angst.
(4) European Consumer Inflation Data Out Wednesday
Preliminary September Eurozone inflation data is out Wednesday and, rest assured, the ECB will be watching closely.
August inflation turned negative for the first time since May 2016. With the economy showing signs of weakening amid the coronavirus resurgence, concern is growing. ECB board member Fabio Panetta warned that inflation remains “uncomfortably” below its near-2% target.
Market-based inflation expectations, closely tracked by rate-setters, are also flashing warnings, having fallen to two-month lows. No wonder that speculation about another round of ECB stimulus before year-end is building, as are expectations for a rate cut in 2021.
(5) Will Europe’s Struggling Banks Consolidate?
European policymakers have stopped worrying that the region’s banks are too big to fail, and instead fret they are too small to survive.
Average return on equity — a measure of profitability — at European banks is around 7%, half that of their American peers. The STOXX Europe 600 bank index has fallen back below levels hit during the 2008 crisis and hovers off record lows.
For regulators, deals may be the only way out of the malaise. They are trying to make tie-ups easier — helping drive mergers of domestic retail lenders in Italy and Spain this year.
Now focus is on banking giants, with sources saying UBS examined a tie-up with Credit Suisse earlier this year. Deutsche Bank hinted this week it could join the fray once it finishes its latest overhaul.
Muted share price reaction suggest investors have limited confidence mega deals can be pulled off just yet. But with losses caused by COVID-19 set to crystalize in the coming months, some may soon have no other option.
Top Zacks #1 Rank Stocks
Let’s take a look at the “Belle of the Ball” – remote-working driven stocks.
Intuit: This is a $318 per share Computer-Software stock, making for a whopping $106B market cap stock. I see a poor Zacks Value score of F, a good Zacks Growth score of B, and a lousy Zacks Momentum score of F.
FedEx: This is a $250 a share Air Transportation-Cargo stock, making for a $64B market cap stock. I see an average Zacks Value score of C, a great Zacks Growth score of A, and a good Zacks Momentum score of B.
NetEase: This stock takes the prize for most overvalued Zacks #1 Rank tech stock. At a stunning $472 a share, making for a $60B market cap. Scarily, there is a Zacks Value score of F, a Zacks Growth score of F, and a Zacks Momentum score of F.
To no surprise, we are seeing Nasdaq weakness the last few weeks.
Tech momentum traders are taking profits off the table on overvalued stocks like these.
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