Stocks falter on the last trading day of the quarter, as the World Health Organization warns that “the worst is yet to come” with COVID-19.
But up to 16% and 18% respectively, the Dow DJIA,
and S&P 500 SPX,
They are poised for the best three-month stretch since late 1998, although that doesn’t offset the ugly first-quarter losses. Outperforming all newcomers is the Nasdaq Composite, up 28%, as tech stocks have largely emerged decently since the tough six months.
Our call of the day advises to stay with the winners for the rest of the year. “We believe the US will continue to be the best relative regional performance and that style leadership will return firmly to technology and defense, after the recovery of tactical value seen in [second half] May and [first half] June, “says Mislav Matejka and a team of strategists at JPMorgan Casenove.
Stocks of value, often in cyclical industries that perform better as economies recover, have recovered in recent weeks. Lagging behind in the post-financial crisis recovery, they have attracted bargain-seeking investors and are hopeful of a “V” shaped recovery.
But Matejka says that any rotation we’ve seen of defensive and technical cycling has ended. To continue to outperform, value stocks need purchasing manager indices to show signs of economic expansion. Continuing high levels of unemployment in the second half and fears of a resurgence of the virus will stop it, he adds.
“Our economists forecast that the worst of the weakness in the labor market is probably behind us; however, the projected path is far from a V-shaped recovery, “and that will make it harder for the consumer, strategists say.
And defensive and tech stocks are still priced attractively, says Matejka.
Their forecast is not far off from an investor survey conducted by DataTrek Research, which found that 52% of respondents expect technology stocks to outperform all other sectors by miles for the rest of 2020.
But Nicholas Colas, co-founder of DataTrek, says the survey also reveals that we are headed for a “market without conviction.” A fifth of respondents say they expect the S&P 500 to end the year 10% more.
“All the options, from ‘really bad’ (down + 10% from here) to ‘really good’ (+ 10%) got basically the same number of votes,” he says. “And we are only talking about the next six months.”
The market
Dow YM00,
S&P ES00,
and Nasdaq NQ00,
futures are down, with European stocks SXXP,
mixed, but headed for the best quarter since 2015. Asian stocks ended in green, with China’s CSI 300,000,300,
an increase of 1.3%, and perhaps getting a little help from data showing factory and commercial activity at the three and seven month highs respectively.
The graphic
The buzz
Uber UBER,
He is reportedly in talks to buy rival food delivery group San Francisco Postmates in what could be a $ 2.6 billion deal.
Case-Shiller home prices and consumer confidence data are to come. At noon, lawmakers will question Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin about the effectiveness of the trillions of dollars in emergency aid distributed since the pandemic began.
More reopening breaks: indoor dining in New Jersey and perhaps New York, and in Leicester UK. Chinese researchers have identified a new swine flu with pandemic potential.
On Tuesday, the EU will establish rules on who can travel to the 14-country bloc. The United States, Russia, Brazil, and India probably won’t make the cut.
Conagra CAG packaged food group,
will report earnings, with results from global shipper FedEx FDX,
due after closing.
Random readings
California’s Golden State Killer admitted 13 murders.
Iran sentenced a journalist to death for the 2017 protests.
“Buy Apple” began to be a trend after this thread:
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