The National Bureau of Economic Research, on Jun 8, stated that the longest economic expansion in the history of the United States came to an abrupt end in February after the economy plunged into recession.

 

It comes as no surprise that the coronavirus outbreak played a huge part in dragging down economic growth in February, before dealing a massive blow in March. The pandemic resulted in nationwide shutdown, uptick in unemployment level and decline in corporate earnings. In fact, industries including travel, tourism, retail and entertainment have been impacted severely by the crisis.

 

Following the developments, the economy tanked into such a recession that many market pundits anticipated second-quarter GDP to decline a whopping 40%. In the first quarter, the economy had already contracted by 4.8% — one of the deepest contractions on record. 

 

However, for Wall Street, it’s almost as if the pandemic never happened. In fact, major bourses closed above, or near their all-time closing highs on Jun 8. 

 

The Dow Jones Industrial Average gained for the sixth straight trading session on Jun 8, and surging 48% from its March 23 low. The broader S&P 500 has erased its losses for the year and is up nearly 45% since Mar 23. The tech-heavy Nasdaq also finished at 1.1% — an all-time high after notching an intraday record on Jun 5. 

 

So, what is driving the market? As lockdown measures eased, optimism built around a possible economic recovery. Such a belief gained further momentum on the back of May’s stunning jobs report. A mind-boggling 2.5 million U.S. jobs were regained in May, in contrast to several economists’ forecast of a loss of 7.25 million jobs.

 

In fact, earlier on Apr 29, when the Commerce Department announced that the economy shrank in the first quarter, stocks collectively rose 2.9%. Similarly, a month ago, the Bureau of Labor Statistics announced that more than 20 million jobs were lost in April and unemployment hit the highest level since the Great Depression, yet, stocks still scaled upwards. So, why is the market behaving this way?

 

This is because investors remain encouraged about stimulus measures provided by the Trump administration and the Fed to pep up economic growth.

 

The government has approved a more than a trillion-dollar relief plan that will directly benefit American consumers and small business houses. It will also help the struggling U.S. airline industry, which has taken a serious beating due to travel restrictions and cancellations.

 

The Fed, by the way, has already trimmed borrowing costs and pumped billions of dollars into the banking system to sustain the credit flow. Policy makers unanimously agreed to trim benchmark federal funds rate a full percentage point to a range of zero to 0.25%.

 

 

As mentioned above, despite the U.S. officially being in a recession, Wall Street has more or less moved north driven by promising jobs data, and stimulus actions taken by the government and the central bank. And so, investors looking for better returns should continue to put money in sound stocks that can make the most of the upward journey in the near term.

 

These stocks flaunt a Zacks Rank #1 (Strong Buy) and a VGM Score of A. 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Atlas Air Worldwide Holdings, Inc. provides outsourced aircraft and aviation operating services. The Zacks Consensus Estimate for its current-year earnings increased 27.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 61.3%.

 

Dollar General Corporation (DG Quick QuoteDG - Free Report) provides various merchandise products in the southern, southwestern, Midwestern, and eastern United States. The Zacks Consensus Estimate for its current-year earnings improved 8.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 20.5%.

 

Murphy USA Inc. (MUSA Quick QuoteMUSA - Free Report) engages in the marketing of retail motor fuel products and convenience merchandise. The Zacks Consensus Estimate for its current-year earnings increased 46.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 68.3%.

 

Sprouts Farmers Market, Inc. (SFM Quick QuoteSFM - Free Report) provides fresh, natural, and organic food products in the United States. The Zacks Consensus Estimate for its current-year earnings increased 22.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 29.6%.

 

Great Lakes Dredge & Dock Corporation (GLDD Quick QuoteGLDD - Free Report) provides dredging services in the United States. The Zacks Consensus Estimate for its current-year earnings improved 23.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 23.3%.

 

 

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.      

 

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.