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Stock Market News for Jun 23, 2020

Zacks Equity Research

U.S. stock markets gained on Monday buoyed by continuation of reopening hope and strong performance by the technology sector. Increasing possibility of a V-shaped recovery of the U.S. economy bolstered investors' confidence on risky assets like equities. All three major stock indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) gained 0.6% or 153.50 points to close at 26,024.96, reversing a 3-day losing streak. Notably, 16 components of the 30-stock blue-chip index ended in the green while 14 closed in red. The S&P 500 advanced 0.7% to end at 3,117.86. The technology Select Sector SPDR (XLU) climbed 1.6% while the Financials Select Sector SPDR (XLF) dropped 1.1%. Notably, four out of eleven sectors of the benchmark index closed in positive territory while seven finished in red.

Meanwhile, the tech-heavy Nasdaq Composite ended at 10,056.47, rallying 1.1% or 110.35 points. The tech-laden index recorded its all time high closing as well as all time intraday high at 10,086.89. This was Nasdaq Composite's second closing above 10,000 and 20th record close this year. The index posted its seven straight winning streak, reflecting its longest win streak since Dec 26, 2019.

The fear-gauge CBOE Volatility Index (VIX) down 9.5% to 31.77. A total of 10.66 billion shares were traded on Monday, lower than the last 20-session average of 13.29 billion. Advancers outnumbered decliners on the NYSE by a 1.18-to-1 ratio. On Nasdaq, a 1.19-to-1 ratio favored advancing issues.

Possibility of a V-Shaped Economic Recovery

Despite the resurgence of the deadly coronavorus in various states, it is unlikely that a second round of lockdown will be imposed. Better-than-expected economic data, despite the fact that the aggregate economy is still way below its pre-lockdown level of activities, have shown fundamental stability of the U.S. economy.

Moreover, the U.S. government has injected around $3 trillion in fiscal stimulus into the economy and Federal Reserve’s balance sheet skyrocketed to $7.21 trillion as of Jun 3 as it poured money into the economy. On Jun 16, Bloomberg reported that the Trump administration is preparing a $1 trillion infrastructure project including construction of roads, bridges, 5G wireless networks and rural broadband.

Additionally, the benchmark interest rate has been reduced to the range of 0%-0.25% by the Fed and is likely to stay within it till 2022. All these stimulus will boost quick economic recovery.  

Apple's WWDC

In its Worldwide Development Conference (WWDC), Apple Inc. AAPL revealed iOS 14 with a new home screen for iPhones, iPadOS 14, macOS Big Sur and watchOS 7. The company said its upcoming Mac systems will use chips made by itself instead of Intel Corp. INTC.

Consequently, shares of Apple rose 2.6%. Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

According to the National Association of Realtors, sales of existing homes plunged 9.7% in May to a seasonally adjusted annualized rate of 3.91 million units compared with a revised sale of 4.33 million units in April. The consensus estimate was for 4.05 million units. Existing home sales were down 26.6% year over year, reflecting the largest annual decline since 1982.

The Chicago Fed’s national activity index took a sharp turnaround and came in at 2.61 in May from a revised minus 17.89 in April. Any reading above zero indicates expansion of economic activities.

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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