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Major Indexes Post Best Intraday Rebound in 3 Months: 5 Picks
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Wall Street has started this week on a positive note after suffering a turmoil last week that ended the market's more than 10-week long rally. On Jun 15, the three major indexes — the Dow, the S&P 500 and the Nasdaq Composite — started in red and were down 3%, 2.5% and 1.9%, respectively, at intraday lows. However, these three indexes finished the day with a gain of 0.6%, 0.8% and 1.4%, respectively.
Notably, the Dow and the S&P 500 registered their biggest intraday turnaround since Mar 19 while the Nasdaq Composite recorded its sharpest intraday rebound since May 27. The Fed's decision to expand its scope to support credit markets amid the pandemic bolstered market participants' confidence.
Unprecedented Stimulus From Fed
The Federal Reserve is doing an excellent job by endorsing smooth credit conditions to support the coronavirus-stricken economy. On Jun 15, the Fed initiated a lending program of up to $600 billion to small and mid-sized businesses in a desperate move.
Under this program, businesses with up to 15,000 employees or revenues up to $5 billion will get loan in the range of $250,000 to $300 million for 5-years in floating rate. The central bank will encourage retail banks to lend to struggling companies and will purchase 95% of each loan extended under the facility.
On Jun 15, the central bank expanded the scope of its $750 billion emergency corporate debt loan facility. Under the new guidelines, the Fed will buy individual corporate bonds that have remaining maturities of five years or less in the secondary market along with its existing ETF buying program.
Federal Reserve’s balance sheet skyrocketed to $7.21 trillion as of Jun 3 as it poured money into the economy. Notably, Fed is currently buying $80 billion Treasury Notes and $40 billion in mortgage-backed securities per month. Moreover, the benchmark interest rate has been reduced to the range of 0%- 0.25% and is likely to stay within that range till 2022.
Massive Fiscal Stimulus
The U.S. government has injected around $3 trillion in fiscal stimulus into the economy in order to protect it from the coronavirus-induced devastation. The Trump administration's decision to give unemployment insurance and stimulus checks for retirees as well as a massive $800 billion restructuring package to small businesses greatly helped in reviving this space.
Meanwhile, on Jun 11, Treasury Secretary Steven Mnuchin said that a second round of lockdown is not a viable option as it will create more damage than combating coronavirus. He also said that the Trump administration is considering another round of fiscal stimulus of more than $1 trillion next month.
On Jun 14, White House economic adviser Larry Kudlow said the economy “has got to open.” He argued that the recent surge in coronavirus cases is nothing to do with reopening but due to an increase in the number of testing.
Our Top Picks
At this stage, it will be prudent to invest in S&P 500 stocks with a favorable Zacks Rank that popped in the past month. These stocks have strong growth potential and witnessed robust earnings estimate revision within the last 30 days. An upward earnings per share estimate revision for 2020 for any stock simply means the market is expecting these companies to do good business this year.
The chart below shows the price performance of our five picks in past month.
Synopsys Inc. (SNPS - Free Report) is a leading vendor of electronic design automation software offering a full suite of products used in the logic synthesis and functional verification phases of chip design, including a broad array of reusable design building blocks.
The company has an expected earnings growth rate of 15.6% for the current year (ending October 2020). The Zacks Consensus Estimate for the current year has improved by 1.2% over the past 30 days.
eBay Inc. (EBAY - Free Report) is one of the largest online retailers in the world. It operates the marketplace and classifieds platforms that connect buyers and sellers worldwide enabling users to list, buy, sell and pay for items through various online, mobile and offline channels.
The Zacks Rank #1 company has expected earnings growth of 21.9% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.5% over the past 7 days.
Otis Worldwide Corp. (OTIS - Free Report) manufactures, installs, and services elevators and escalators worldwide. It operates through two segments, New Equipment and Service. The Zacks Rank #1 company has an expected earnings growth rate of 13.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 1.5% over the past 30 days.
Lowe's Companies Inc.(LOW - Free Report) is one of the world’s leading home improvement retailers, offering services to homeowners, renters and commercial business customers. The company has an expected earnings growth rate of 15.7% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 0.5% over the past 7 days.
NVIDIA Corp. (NVDA - Free Report) is gaining decent market share among gaming service providers. The strong line-up of advanced graphics cards has made it a favorite graphics card provider among PC makers. Its foray into the autonomous vehicles space is a major positive. NVIDIA’s GPUs are rapidly gaining from the proliferation of artificial intelligence.
The company has an expected earnings growth rate of 36.4% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 4.2% over the past 30 days.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Major Indexes Post Best Intraday Rebound in 3 Months: 5 Picks
Wall Street has started this week on a positive note after suffering a turmoil last week that ended the market's more than 10-week long rally. On Jun 15, the three major indexes — the Dow, the S&P 500 and the Nasdaq Composite — started in red and were down 3%, 2.5% and 1.9%, respectively, at intraday lows. However, these three indexes finished the day with a gain of 0.6%, 0.8% and 1.4%, respectively.
Notably, the Dow and the S&P 500 registered their biggest intraday turnaround since Mar 19 while the Nasdaq Composite recorded its sharpest intraday rebound since May 27. The Fed's decision to expand its scope to support credit markets amid the pandemic bolstered market participants' confidence.
Unprecedented Stimulus From Fed
The Federal Reserve is doing an excellent job by endorsing smooth credit conditions to support the coronavirus-stricken economy. On Jun 15, the Fed initiated a lending program of up to $600 billion to small and mid-sized businesses in a desperate move.
Under this program, businesses with up to 15,000 employees or revenues up to $5 billion will get loan in the range of $250,000 to $300 million for 5-years in floating rate. The central bank will encourage retail banks to lend to struggling companies and will purchase 95% of each loan extended under the facility.
On Jun 15, the central bank expanded the scope of its $750 billion emergency corporate debt loan facility. Under the new guidelines, the Fed will buy individual corporate bonds that have remaining maturities of five years or less in the secondary market along with its existing ETF buying program.
Federal Reserve’s balance sheet skyrocketed to $7.21 trillion as of Jun 3 as it poured money into the economy. Notably, Fed is currently buying $80 billion Treasury Notes and $40 billion in mortgage-backed securities per month. Moreover, the benchmark interest rate has been reduced to the range of 0%- 0.25% and is likely to stay within that range till 2022.
Massive Fiscal Stimulus
The U.S. government has injected around $3 trillion in fiscal stimulus into the economy in order to protect it from the coronavirus-induced devastation. The Trump administration's decision to give unemployment insurance and stimulus checks for retirees as well as a massive $800 billion restructuring package to small businesses greatly helped in reviving this space.
Meanwhile, on Jun 11, Treasury Secretary Steven Mnuchin said that a second round of lockdown is not a viable option as it will create more damage than combating coronavirus. He also said that the Trump administration is considering another round of fiscal stimulus of more than $1 trillion next month.
On Jun 14, White House economic adviser Larry Kudlow said the economy “has got to open.” He argued that the recent surge in coronavirus cases is nothing to do with reopening but due to an increase in the number of testing.
Our Top Picks
At this stage, it will be prudent to invest in S&P 500 stocks with a favorable Zacks Rank that popped in the past month. These stocks have strong growth potential and witnessed robust earnings estimate revision within the last 30 days. An upward earnings per share estimate revision for 2020 for any stock simply means the market is expecting these companies to do good business this year.
Finally, each of 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 our five picks in past month.
Synopsys Inc. (SNPS - Free Report) is a leading vendor of electronic design automation software offering a full suite of products used in the logic synthesis and functional verification phases of chip design, including a broad array of reusable design building blocks.
The company has an expected earnings growth rate of 15.6% for the current year (ending October 2020). The Zacks Consensus Estimate for the current year has improved by 1.2% over the past 30 days.
eBay Inc. (EBAY - Free Report) is one of the largest online retailers in the world. It operates the marketplace and classifieds platforms that connect buyers and sellers worldwide enabling users to list, buy, sell and pay for items through various online, mobile and offline channels.
The Zacks Rank #1 company has expected earnings growth of 21.9% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.5% over the past 7 days.
Otis Worldwide Corp. (OTIS - Free Report) manufactures, installs, and services elevators and escalators worldwide. It operates through two segments, New Equipment and Service. The Zacks Rank #1 company has an expected earnings growth rate of 13.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 1.5% over the past 30 days.
Lowe's Companies Inc. (LOW - Free Report) is one of the world’s leading home improvement retailers, offering services to homeowners, renters and commercial business customers. The company has an expected earnings growth rate of 15.7% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 0.5% over the past 7 days.
NVIDIA Corp. (NVDA - Free Report) is gaining decent market share among gaming service providers. The strong line-up of advanced graphics cards has made it a favorite graphics card provider among PC makers. Its foray into the autonomous vehicles space is a major positive. NVIDIA’s GPUs are rapidly gaining from the proliferation of artificial intelligence.
The company has an expected earnings growth rate of 36.4% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 4.2% over the past 30 days.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>