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Nasdaq's Best Third Quarter in 10 Years: Best ETFs & Stocks

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Technology stocks and ETFs have been star performers of this year. The coronavirus outbreak could not take the sheen out of this sector but rather added more to it. Social distancing norms enacted globally to mitigate the spread of the virus compelled people to stay at home, binge on online shopping and work as well as learn from home.

Though many corners of the global economy have started to reopen, the trend of work-and-learn-from home stayed strong. Renewed rise in virus cases in the United States and Europe also added to the strength of the tech sector at September-end.

This new lifestyle boosted various corners of the technology sector, ranging from enterprise cloud computing, cyber security, remote communications, video gaming and e-commerce to online payments. Stimulus checks, low rates and cheap oil have provided another round of boost to the consumer sector.

No wonder, the tech-heavy Nasdaq index posted its best third quarter in 10 years this year. The index has gained 13.1% in the past three months (as of Sep 30, 2020).

Best Q3 in 10 Years

July and August were great for the index though September proved tough. FAANGs got a bashing in early September mainly due to lofty valuations. Nasdaq in fact entered into a correction in the month (read: Nasdaq in Correction: One Solid Reason to Buy the Dip in ETFs).

Since the Nasdaq is heavy on technology, tech earnings are important for the index. Tech earnings were down only 0.7% on 4% higher revenues in Q2. This is in contrast to a 32.4% slump in S&P 500 earnings on a 9.2% decline in revenues.

In Q3 too, the tech sector’s earnings fell only 3.8% on 4.3% higher revenues while the S&P 500 posted a 22.8% decline in earnings on 2.8% lower revenues, per the Earnings Trends issued on Sep 30, 2020. Against this backdrop, below we highlight a few winning Nasdaq stocks and ETFs of the quarter.

Apart from tech and consumer stocks, biotech stocks also played their role in pushing the Nasdaq higher. Several biotech IPOs and researches in coronavirus related vaccines and treatments as well as in the field of oncology and neurology were the tailwinds for the biotech sector. In terms of M&A and IPO, the third quarter was extremely upbeat with software IPOs deserving special thanks.

Winning Stocks

Seres Therapeutics Inc. (MCRB - Free Report) – Up 409.6% in the past 12 weeks

Seres Therapeutics, Inc. offers a microbiome therapeutics platform. It is focused on developing Ecobiotic microbiome therapeutics that treats dysbiosis in the colonic microbiome.

Sunworks Inc. (SUNW - Free Report) – Up 235.1% in the past 12 weeks

Sunworks is focused on the design, installation and management of solar power systems for commercial, agricultural and residential customers.

Autobytel Inc. (AUTO - Free Report) – Up 182.3% in the past 12 weeks

AutoWeb provides consumer leads and associated marketing services primarily to automotive dealers and manufacturers throughout the United States.

Winning ETFs

Invesco QQQ Trust (QQQ - Free Report) – Up 13.8%

The underlying Nasdaq-100 Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization.

Fidelity NASDAQ Composite Index Tracking Stock Fund (ONEQ - Free Report) – Up 12.7%

The underlying Nasdaq Composite Index is the market capitalization-weighted index of over 3,300 common equities listed on the Nasdaq stock exchange.

Direxion NASDAQ100 Equal Weighted Index Shares (QQQE - Free Report) – Up 9.9%

The underlying NASDAQ-100 Equal Weighted Index consists of companies on the NASDAQ-100 Index but each of the securities is initially set at a weight of 1.00% of the index. The NASDAQ-100 Index includes 100 of the largest non-financial securities listed on NASDAQ based on capitalization.

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