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To June 1st, the S&P 500 YTD gain was +11.8%. That is the same return as last month.
The bull trend appears fully intact.
But a summertime consolidation period may be here.
Across last year, the S&P 500 annual gain was +18.4%. A majority of that gain came in the last two months of the year. That was an above-average annual S&P 500 return.
Why broad summertime share index consolidation?
The best answer is the most concise one:
The world — outside of a few advanced countries — needs to play catch-up on COVID vaccination.
What of the COVID Situation?
Israel has led the global vaccine race. By early June 2021, only 12 COVID cases a day were reported there, with 0% of tests returning positive.
By July 2nd all U.K. priority groups will have received 2nd doses. By August 28th, all U.K. adults will have received 2 doses.
Israel, the U.K., Canada and U.S.A. moved swiftly.
The U.S. turnaround has been terrific. U.S. Center for Disease Control (CDC) data shows COVID-19 infection and mortality matters vastly improved after a mid-February peak.
U.S. COVID counts are at lows not seen since the start of the pandemic. On May 29th, the U.S. counted 12,663 new daily cases. The 7-day moving average was 20,277.
Yet only 11 nations have administered shots to cover at least 30% of the population.
Image Source: Charlie BiLello
Progress elsewhere is very poor. Major nations such as Brazil, India, China and Russia lag. On May 31st, only 12% of India’s population had been partially vaccinated. And only 3% were fully vaccinated. Japan (with the Olympics this summer) is at 6.0%.
On May 28th, 10.4% of the world’s population had 1 dose, and 5.3% had gotten 2 doses.
Zacks June Sector/Industry/Company Telescope
The Zacks Rank system showed 5 strong sectors, with many industries clearly bullish.
Info Tech was the clear top sector again, strong across all industries.
2 deep cyclical sectors came out on top – Materials and Industrials. Think Steel; Building Products-Construction Materials, Paper and Chemicals; and Metal Fabricating.
2 more cyclicals: Energy and Financials stayed Attractive too, with Oil & Gas Exploration and Production, Drillers, and big Integrated groups looking strong, given $67 a barrel WTI oil prices.
Consumer Discretionary stayed Market Weight. Ditto Consumer Staples, with Agri-business booming with commodity prices.
Health Care made it back to Market Weight. Medical Care led this month.
At the back, defensives.
Telcos and Utilities were at Market Weight and Very Unattractive, respectively.
(1) Info Tech stayed Very Attractive. Computer-Office Equipment, Misc. Tech, Computer-Software Services, and Electronics-Semiconductors (with a global supply shortage), all of those look excellent.
(4) Financials stayed at Attractive. Banks & Thrifts, Investment Banking and Major Banks look good. Higher rate spreads and savings help all of these.
(5) Energy stayed at Attractive. Oil & Gas E&P, Drilling and Integrated looked great.
(6) Consumer Discretionary stayed at Market Weight. Apparel and Home Furnishings were strong (a remote working pair) and also showed the stimulus check buyer and saver is in play.
(7) Consumer Staples rose to Market Weight from Unattractive. Agri-business (commodity price boom) and Food/Drug Retail looked best.
(8) Health Care rose to Market Weight from Unattractive. Medical Care looked the best.
(9) Communications Services stayed Market Weight. Utility-Telephone the best.
(10) Utilities sunk to Very Unattractive. Utilities-Gas Distribution was the best, at Market.
My Stock Strategist Thoughts?
Regardless, carry on with regularly-spaced, overweight equity asset allocations.
The Fed and the other G10 central banks have sharebuyers' backs. Respectable stocks are the way to go.
Consensus “bottoms-up” revenue growth projections for 2021 show us a +11.8% rise.
Along with that, 2021 annual earnings should snapback +33.7%.
Zacks “fair value” earnings call is based on a 2022 forward look ($203). Add on a huge dollop of Fed and G10 central bank-driven valuation upside to that.
Zacks thinks 4,100 on the S&P 500 by the end of 2021 is a valid target.
Last year, very bullish top-down Wall Street strategists called for the S&P 500 to end 2020 trading at 3,450. It ended at 3,756.
The latest 2021 “bottoms-up” call is for the S&P 500 to reach 4,746 in 12 months.
To actively compute “fair value” valuations, factor in earnings growth ahead, like the stock market does, 6 to 12 months.
Enjoy the rest of the Zacks June 2021 Market Strategy report.
Regards,
John Blank
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Time to Play COVID Catch-Up: Zacks JUNE Market Strategy
The following is an excerpt from Zacks Chief Strategist John Blank’s full Jun Market Strategy report To access the full PDF, click here.
Introduction
To June 1st, the S&P 500 YTD gain was +11.8%. That is the same return as last month.
The bull trend appears fully intact.
But a summertime consolidation period may be here.
Across last year, the S&P 500 annual gain was +18.4%. A majority of that gain came in the last two months of the year. That was an above-average annual S&P 500 return.
Why broad summertime share index consolidation?
The best answer is the most concise one:
The world — outside of a few advanced countries — needs to play catch-up on COVID vaccination.
What of the COVID Situation?
Israel has led the global vaccine race. By early June 2021, only 12 COVID cases a day were reported there, with 0% of tests returning positive.
By July 2nd all U.K. priority groups will have received 2nd doses. By August 28th, all U.K. adults will have received 2 doses.
Israel, the U.K., Canada and U.S.A. moved swiftly.
The Daily Count of Total Doses Administered and Reported to the CDC has the latest U.S. COVID vaccine data.
The U.S. turnaround has been terrific. U.S. Center for Disease Control (CDC) data shows COVID-19 infection and mortality matters vastly improved after a mid-February peak.
U.S. COVID counts are at lows not seen since the start of the pandemic. On May 29th, the U.S. counted 12,663 new daily cases. The 7-day moving average was 20,277.
Yet only 11 nations have administered shots to cover at least 30% of the population.
Progress elsewhere is very poor. Major nations such as Brazil, India, China and Russia lag. On May 31st, only 12% of India’s population had been partially vaccinated. And only 3% were fully vaccinated. Japan (with the Olympics this summer) is at 6.0%.
On May 28th, 10.4% of the world’s population had 1 dose, and 5.3% had gotten 2 doses.
Zacks June Sector/Industry/Company Telescope
The Zacks Rank system showed 5 strong sectors, with many industries clearly bullish.
Info Tech was the clear top sector again, strong across all industries.
2 deep cyclical sectors came out on top – Materials and Industrials. Think Steel; Building Products-Construction Materials, Paper and Chemicals; and Metal Fabricating.
2 more cyclicals: Energy and Financials stayed Attractive too, with Oil & Gas Exploration and Production, Drillers, and big Integrated groups looking strong, given $67 a barrel WTI oil prices.
Consumer Discretionary stayed Market Weight. Ditto Consumer Staples, with Agri-business booming with commodity prices.
Health Care made it back to Market Weight. Medical Care led this month.
At the back, defensives.
Telcos and Utilities were at Market Weight and Very Unattractive, respectively.
(1) Info Tech stayed Very Attractive. Computer-Office Equipment, Misc. Tech, Computer-Software Services, and Electronics-Semiconductors (with a global supply shortage), all of those look excellent.
Zacks #1 (STRONG BUY): MKS Instruments (MKSI - Free Report)
(2) Materials stayed at a Very Attractive. Steel, Building Products-Construction Materials, Paper, and Chemicals were very strong.
Zacks #1 (STRONG BUY): Glencore PLC (GLNCY - Free Report)
(3) Industrials shifted to Attractive from Very Attractive. Metal Fabricating, Construction-Building Services, and Machinery, were the top industries.
Zacks #1 (STRONG BUY): Alcoa (AA - Free Report)
(4) Financials stayed at Attractive. Banks & Thrifts, Investment Banking and Major Banks look good. Higher rate spreads and savings help all of these.
(5) Energy stayed at Attractive. Oil & Gas E&P, Drilling and Integrated looked great.
(6) Consumer Discretionary stayed at Market Weight. Apparel and Home Furnishings were strong (a remote working pair) and also showed the stimulus check buyer and saver is in play.
(7) Consumer Staples rose to Market Weight from Unattractive. Agri-business (commodity price boom) and Food/Drug Retail looked best.
(8) Health Care rose to Market Weight from Unattractive. Medical Care looked the best.
(9) Communications Services stayed Market Weight. Utility-Telephone the best.
(10) Utilities sunk to Very Unattractive. Utilities-Gas Distribution was the best, at Market.
My Stock Strategist Thoughts?
Regardless, carry on with regularly-spaced, overweight equity asset allocations.
The Fed and the other G10 central banks have sharebuyers' backs. Respectable stocks are the way to go.
Consensus “bottoms-up” revenue growth projections for 2021 show us a +11.8% rise.
Along with that, 2021 annual earnings should snapback +33.7%.
Zacks “fair value” earnings call is based on a 2022 forward look ($203). Add on a huge dollop of Fed and G10 central bank-driven valuation upside to that.
Zacks thinks 4,100 on the S&P 500 by the end of 2021 is a valid target.
Last year, very bullish top-down Wall Street strategists called for the S&P 500 to end 2020 trading at 3,450. It ended at 3,756.
The latest 2021 “bottoms-up” call is for the S&P 500 to reach 4,746 in 12 months.
To actively compute “fair value” valuations, factor in earnings growth ahead, like the stock market does, 6 to 12 months.
Enjoy the rest of the Zacks June 2021 Market Strategy report.
Regards,
John Blank
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>