The coronavirus-stricken 2020 has kept economists and financial experts busy calculating the spread of the pandemic, stiffness of the infection curve and resurgence of the health hazard instead of complex statistical and mathematical models of finance. Any information on the COVID-19 vaccine front is more important for financial researchers rather than any economics or finance-related information.
However, looking at the U.S. stock markets, one will hardly find any trace of the coronavirus-induced devastations. Wall Street has been delivering an astonishing performance in the past eight months, barring fluctuations in September and October.
Even those financial experts, who were most pessimistic about Wall Street this year, are now providing a robust outlook. We are just five weeks away from year-end and Wall spirits are high despite the pandemic.
Wall Street Shining in November
On Nov 24, the Dow closed for the first time above 30,000. During intraday trading, the blue-chip index recorded an all-time high of 30,116.51. The 30-stock index first touched 29,000 on Jan 10,2020. It took nearly ten and a half months for the index to achieve another milestone of 30,000, defying the coronavirus-led market mayhem.
On Nov 24, the S&P 500 recorded a fresh closing high at 3,635.41. The benchmark index registered its all-time high at 3,645.99 on Nov 9. The Nasdaq Composite recorded its first closing above the psychological barrier 12,000 for the first time since Sep 2, the day in which the tech-heavy index posted its all-time high at 12,074.06.
A growing U.S. economy albeit at a slow pace due to lack of a new fiscal stimulus, fresh initiative for a new coronavirus-aid package, several recent positive developments on the COVID-19 treatment front and hopes of the availability of a vaccine in the near future and the gradual improvement of U.S. corporate earnings estimates for fourth-quarter 2020 acted as the major catalysts for the stock market's impressive run.
Moreover, the fundamentals of the U.S. economy remain stable and the coronavirus-led devastations were not as severe as expected in February/March. The U.S. manufacturing industries have been witnessing a V-shaped recovery in the past six months. The housing sector has remained robust throughout this year, and business sentiments are strengthening as chances of the reopening of the broader economy are increasing.
Globally U.S. Stock Markets Are the Best
The U.S. stock markets are the best destinations for investors. Between the post-recession era and the outbreak of the novel coronavirus, overall returns of U.S. stocks were nearly four times higher than the rest of the world.
After successfully recovering from the Great Recession, Wall Street also recovered overwhelmingly from the trade-related assault of 2018. Wall Street is poised to keep the flag high amid coronavirus-led devastations too.
Year to date, the three major stock indexes of Wall Street — the Dow, the S&P 500 and the Nasdaq Composite — rallied 5.3%, 12.5% and 34.2%, respectively. However, except a 0.3% gain in Germany's DAX, all major European stock indexes are running losses.
Year to date, FTSE 100 of the U.K., CAC 40 of France and the pan-European STOXX 600 have lost 14.7%, 7% and 5.7%, respectively. Moreover, Australia's ASX 200 gained a mere 0.01% year to date.
Major Asian stock indexes like Hang Seng has declined 5.7% year to date. Other important Asian stock indexes such as NIKKEI 225 of Japan, Shanghai Composite of China, KOSPI of South Korea and NIFTY 200 of India have added 11.6%, 11.2%, 18.8% and 7.5%, respectively.
Overall, Wall Street's performance is much better than the overall European and Asia-Pacific regions. From their coronavirus-induced bear market low level recorded on Mar 23, the Dow, the S&P 500 and the Nasdaq Composite - have soared an astonishing 65%, 65.9% and 81.5%, respectively.
Besides the large-cap specific three indexes, the small-cap centric Russell 2000 was at an all-time high of 1,862.17 on Nov 24. Year to date, the Russell 2000 is up 11.1%. Another small-cap centric index, the S&P 600 is up 4.7%. The mid-cap centric S&P 400 is up 7.5% year to date. These reflect the broad-based, north-bound movement of Wall Street so far in 2020.
How to Pick the Right Stocks
At this stage, it will be prudent to invest in large-cap (market capital > $50 billion) stocks with a favorable Zacks Rank that are members of any of the three large-cap indexes. These companies have well-established businesses, solid liquidity and brand names.
Also, we have select stocks with strong short-term and long-term (3-5 year) growth potential that have witnessed robust earnings estimate revisions within the last 30 days. These stocks have rallied more than 35% to more than 120% year to date.
Major stocks that fall in this category include Danaher Corp. (
DHR Quick Quote DHR - Free Report) , United Parcel Service Inc. ( UPS Quick Quote UPS - Free Report) , Thermo Fisher Scientific Inc. ( TMO Quick Quote TMO - Free Report) , Target Corp. ( TGT Quick Quote TGT - Free Report) , FedEx Corp. ( FDX Quick Quote FDX - Free Report) , NVIDIA Corp. ( NVDA Quick Quote NVDA - Free Report) , Deere & Co. ( DE Quick Quote DE - Free Report) and Microsoft Corp. ( MSFT Quick Quote MSFT - Free Report) . Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see . the complete list of today’s Zacks #1 Rank stocks here
The chart below shows the price performance of the above-mentioned eight stocks year to date.
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