After the market collapse due to the corona virus in Q1 2020, the shares ended in a strong rally in June and the second quarter. It was the best quarter for investors in at least 20 years.
Although the revival was welcome, the future is not very clear. The ongoing struggle to control the global and American spread of the COVID-19 pandemic continues. So expect the market to remain volatile.
It was up 1.5% by the end of Tuesday. The benchmark index increased by 19.95% during the quarter, the largest quarterly gain since the 20.9% increase in the fourth quarter of 1998. For June, the S&P increased by 1.84%.
It jumped 17.8% in the quarter. That was the best performance of the mega-cap index since Q4 1998.
However, both indices have fallen this year – by 4% and 9.6%, respectively.
Meanwhile, it rose by as much as 30.6% in the quarter, the most technically demanding benchmark, rising by 48.2% since the fourth quarter of 1999. In June, the index rose by 6%.
The huge doll of the NASDAQ makes it rise 12.1% over the year.
De, dominated by large technical stocks, increased by 30% in the quarter (with a 6.3% gain in June). It is up 16.3% from the year.
A major reason for the performance gap between the Dow and S&P and the NASDAQ is that the components of the first two indexes try to represent the economy more broadly, while more than half of the NASDAQ's 100 $ 12.9 trillion market cap is Apple (NASDAQ :), Microsoft (NASDAQ :), Amazon (NASDAQ 🙂 the two classes of Alphabet shares (NASDAQ 🙂 and (NASDAQ :), Facebook (NASDAQ :), Intel (NASDAQ 🙂 and Tesla (NASDAQ: ).
The small cap increased 25% over the same period, the best quarterly profit since 1991, fueled by the rise in biotech stocks. Nevertheless, the year fell by 13.6%.
June Winners
The winners of the quarter were concentrated in stocks of technology and biotechnology that, according to investors, are driving the world economy for the foreseeable future, even if they hope that some will find a cure for COVID-19.
In addition, investors were applauded by the central bank's efforts to support the global economy through massive amounts of stimulus.
As for individual stock performance, we start with Tesla (NASDAQ :).
The electric vehicle maker appears to be the best-selling share for traders looking to make a quick profit: shares were up 29.3% for June, 106.1% for the second quarter, and 158.1% so far this year.
Apple jumped 14.7% for the month and 43.5% for the quarter. Microsoft, up 11% in June, was up 29% in the quarter.
Novavax (NASDAQ :), one of hundreds of companies working on a COVID-19 vaccine, ended in June by nearly 154%, up more than 500% for the quarter.
There was a great interest in shares of companies that helped make the people who were locked up live as normally as possible under the new pandemic.
Zoom video communication (NASDAQ :), whose video conferencing technology allows companies to hold remote meetings – and old students' classmates meet informally – increased by 41.3% in June, 73.5% for the quarter . The stock has gained 273% for the year.
Not surprisingly, because it allows customers to shop online instead of brave brick-and-mortar stores, Amazon also rose higher: 41% in the quarter and 13% in June. The company's market capitalization increased by 50% from $ 916 billion on December 31 to $ 1.376 trillion on Tuesday.
Payment company PayPal Holdings (NASDAQ 🙂 also saw great statistics: it increased by 12.4% in June, 82% for the quarter and 61.1% for the year.
Likewise, the online crafting marketplace Etsy (NASDAQ 🙂 also benefited: up 31% for the month and 176% for the quarter as more of its core customers hid … and went shopping online.
And it wasn't just tech or biotech companies that did better. Clorox (NYSE :), the manufacturer of bleaches and home cleaning products, accelerated due to high demand for its brands. Home improvement retailers Home Depot (NYSE 🙂 and Lowe's (NYSE 🙂 increased 34% and 57% in the quarter as homeowners chose to renovate or improve their environment while hiding at home.
… And losers
On the other side of the spectrum, airlines, hotels and especially cruise lines saw their shares plunge in the first quarter after consumers stopped traveling. While many stocks in this sector bounced from their lows, most are still significantly depressed.
Shares of cruise industry giant Carnival (NYSE 🙂 added 4% in June, 25% for the quarter. Nevertheless, the stock remains under pressure, down nearly 68% for 2020, as it is not clear when cruise lines will resume sailing. Or that they can attract customers.
Traditional retailers such as department stores Macy & # 39; s (NYSE 🙂 and Nordstrom (NYSE 🙂 also suffer: each closes stores and fires thousands of employees.
The energy industry rebounded slightly in June as oil prices rose from the March lows. But business plans from industry players for this year had predicted they could potentially reach $ 90. It didn't even come close.
On a Tuesday settlement with $ 39.27 a barrel, West Texas Intermediate increased 10.6% for the month and over 90% for the quarter. But WTI is down more than 35% this year. That is a significant brake on oil and gas companies.
Royal Dutch Shell (NYSE :)) declined 2.2% on Tuesday after a $ 22 billion depreciation in oil and gas reserves. The stock ended 2.3% in June, but declined by 6.3% during the quarter and decreased by 44% from the year.
Political consequences came on both Facebook and Twitter (NYSE 🙂 – albeit briefly – as several major advertisers, including Coca-Cola (NYSE :), Starbucks (NASDAQ :), PepsiCo (NASDAQ 🙂 and Verizon (NYSE:) said they will stop advertising on social media platforms organized by civil rights organizations because they want to have better control over hate speech on those sites.
Facebook declined 9.5% on Friday, but has reduced losses. The stock has increased by 5% this week.
However, Twitter was flat for a month. It fell 13% last week, but recovered 2.5% this week. For the year, Facebook is still up 10.6%. Twitter is down 7%.
Fed Stimulus, Pandemic Controls And Volatility
In a normal economy, stock investors base investment decisions on the price of a stock, the company's prospects for the future and the economic climate, including the price of money.
Money is cheap at 0.65%. The Federal Reserve has repeatedly vowed to ensure that, and, as the old saying goes, the Fed does not fight.
The rally in the second quarter reflected confidence in the US central bank and optimism that the pandemic came under control or, in President Trump's story, was "about to disappear".
That rosy scenario blew up in late June, such as in states like Texas, Florida, Arizona, and California, where thousands flocked to bars, beaches, and other gathering places, ignoring warnings that the virus was still highly contagious.
So, broke out with sales on Wednesdays and Fridays and rallies on Mondays and Tuesdays.
2020 will even be the most volatile year for equities since 2008, 2009 and 2011. Over 50 trading days this year through June 30, the S&P 500 has gone up or down 1.5% or more – up 22 days and 28 down days.
By contrast, that number was only 13 days throughout 2019. In 2011, the S&P 500 recorded a 60% profit or loss of 1.5%. In 2008 – a really terrible year for equities and the economy – the total was 98. We could be on track to see a new record on this measure by 2020.
