Wall Street saw the best day in two weeks on optimism that the coronavirus pandemic could be slowing. Stay-at-home orders saw coronavirus-related deaths stabilize in places such as New York, while hospitalization of COVID-19 patients slowed down.
Add to this the sweeping economic stimulus packages from the government and the Fed, and the stock market is sure to continue its upward journey. And thanks to the bullish trends, it seems prudent to invest in some of the top gainers.
Apr 6 Trade: Major Indexes Jump on Coronavirus Stabilizing Signs
Signs that the lockdown did help curb the spread of the coronavirus in the United States and Europe helped major bourses climb at least 7% on Apr 6. For instance, New York state that houses the largest number of cases in the United States, reported almost the same number of new deaths from coronavirus on Apr 6 as on Apr 5.
At the same time, China reported no new deaths as of Apr 6 for the first time since January. Nonetheless, major indexes more or less traded steadily throughout yesterday and then surged in the final 10 minutes of the trading session. The gains were mostly turbocharged by big tech names like Apple, Microsoft and Visa. Some of the strong performers were also from the consumer discretionary sector that has been hit hard by the pandemic.
The Dow jumped 7.7% and is now 22.7% down from its closing high attained on Feb 12. The broader S&P 500 climbed 7% and is now down 21.3% from its closing high notched on Feb 19. Similarly, the tech-heavy Nasdaq added 7.3% and is now 19.4% below its closing high reached on Feb 19.
Has the Stock Market Bottomed?
Not only are there a few glimmers of hope that the spread is decelerating, most investors have already priced in the damaged caused by the pathogen. Thus, bullish investors argue that equity prices may not decline sharply even though we are headed for a slowdown in economic activities.
Moreover, many economists are considering the pandemic to be a natural disaster, which may be short lived. And this means the economic recovery will be quick. In other words, it will be a V-shaped recovery since U.S. consumers entered the crisis in a pretty good financial shape and the recession wasn’t caused due to some major fundamental issue.
Secondly, even though the indexes have tumbled in the last couple of months, analysts still expect a modest decline in earnings. For the first quarter, total earnings are expected to be down just 7.1% on 2.3% higher revenues (read more: Corporate Earnings & the Coronavirus Pandemic
Stimulus Measures to Boost Markets
While the stock market has already bottomed, congressional bailout measures will help them scale north. Recently, the White House and the Senate struck a deal for a rescue package worth $2 trillion. And it was certainly the need of the hour as the intensifying coronavirus crisis overwhelmed the healthcare system and brought the economy to a grinding halt.
Senate majority leader Mitch McConnell had said that “at last, the Senate has reached a bipartisan agreement on a historic relief package for this pandemic.” He added that it’s a “wartime level of investment into our nation.”
The landmark agreement is expected to inject enough cash to bolster the economy and provide the required liquidity and help stabilize the financial markets. The Fed has also stepped up and unleashed an array of stimulus measures to date. The central bank said that it would buy an unlimited amount of Treasury and mortgage-backed securities to control the economic damage from the coronavirus outbreak.
Sam Stovall, chief investment strategist at CFRA Research in New York, meanwhile added that “seeing the market soar the way it is, even though the fundamentals continue to be in free fall, the market is looking across the valley and saying 'six months from now things will be on the ascent.”
Top 5 Gainers
Banking on such positive trends, we have selected five solid stocks from major indices. These stocks have not only gained immensely on Apr but are also poised to move north in the near term. At the same time, these stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score
of A or B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
. (ABBV - Free Report
) is a research-based biopharmaceutical company. The company currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has risen 1.9% over the past 60 days. The company saw its shares gain 3.2% on Apr 6. It’s expected earnings growth rate for the current quarter and year is 10.6% and 17.8%, respectively.
Coherus BioSciences, Inc.
(CHRS - Free Report
) is a commercial-stage biotherapeutics company. The company currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved 13.9% up over the past 60 days. The company saw its shares jump 10.5% on Apr 6. It’s expected earnings growth rate for the current quarter and year is 71.9% and 53.7%, respectively.
Bluerock Residential Growth REIT, Inc
. (BRG - Free Report
) is a real estate investment trust. The company currently has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its next-quarter earnings has climbed 4.8% over the past 30 days. The company saw its shares rally 26.1% on Apr 6. It’s expected earnings growth rate for the current and next year is 2.4% and 6%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here
Huntington Ingalls Industries, Inc
. (HII - Free Report
) operates as a military shipbuilding company. The company currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved 8.6% north over the past 60 days. The company saw its shares gain 7% on Apr 6. It’s expected earnings growth rate for the current quarter and year is 56% and 45.2%, respectively.
Installed Building Products, Inc
. (IBP - Free Report
) operates as a residential insulation installer in the United States. The company currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has advanced 1.4% over the past 60 days. The company saw its shares climb 21.2% on Apr 6. It’s expected earnings growth rate for the current year is 10.9%.
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