Wall Street has regained momentum in November after facing severe volatility in the last two months. Notably, U.S. stock markets witnessed an astonishing rally from April to August, terminating the coronavirus-led short bear market. However, resurgence of coronavirus cases, uncertainty regarding a fresh fiscal stimulus and election-related volatilities resulted in market turmoil in September and October.
However, encouraging news on the COVID-19 treatment front and hopes of a vaccine in the near future has significantly strengthened market participants' confidence in risky assets like equities. Investment in momentum stocks with a favorable Zacks Rank may be fruitful in the near term.
Wall Street Surges on Vaccine Hopes
On Nov 9, Pfizer Inc. (NYSE:PFE) PFE and BioNTech SE (NASDAQ:BNTX) BNTX announced that their jointly developed potential vaccine BNT162b2 was more than 90% effective in late-stage study. On Nov 10, the FDA granted emergency authorization to a COVID-19 antibody treatment made by Eli Lilly & Co. LLY. On Nov 16, Moderna (NASDAQ:MRNA) Inc. MRNA reported that its preliminary phase III clinical trial data showed that its potential coronavirus vaccine is more than 94% effective in preventing COVID-19.
The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have rallied 13%, 10.9% and 9.3%, respectively, month to date. Year to date, these three indexes have recorded gains of 5%, 12.3% and 32.9%, respectively.
On Nov 16, the Dow recorded a fresh closing high since Feb 12 and an all-time high since Nov 9. The S&P 500 posted its 24th closing high this year so far. The cyclical and reopening stocks have been major beneficiaries.
Moreover, the small-cap specific Russell 2000 and the S&P 600 have rallied 16.1% and 17%, respectively, month to date. On Nov 13, the Russell 2000 registered a fresh high since August 2018 and on Nov 16, the index touched an all-time high.
Indexes Post Fastest Recovery From Pandemic-Led Bear Market
The Dow entered coronavirus-induced bear market on Mar 9 and both the S&P 500 and the Nasdaq Composite fell into a bear market on the next day. A bear market is characterized as a decline of 20% in any asset's value from its recent high level. These three indexes registered bear market low on Mar 23.
It took 193 trading days for the Dow to record a fresh all-time closing high from its last bear market low, marking the fastest rebound of the blue-chip index since Apr 17, 1991. Meanwhile, the S&P 500 achieved this target in 126 trading days on Aug 18, reflecting its fastest such recovery. The Nasdaq Composite achieved this in just 76 trading days on Jun 8, its quickest rebound from a bear market low since March 2009.
Till Nov 16, the Dow, the S&P 500 and the Nasdaq Composite rose 64.4%, 65.5% and 79.8%, respectively, from their low levels recorded on Mar 23.
Our Top Picks
We have narrowed down our search to five momentum stocks. All these stocks witnessed robust earnings estimate revisions in the past seven 7 days reflecting solid near-term business prospects. These stocks have risen more than 15% month to date. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Momentum Score of A. 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 month to date.
Fulgent Genetics (NASDAQ:FLGT) Inc. FLGT is a medical technology company that provides genetic testing services to physicians with clinically actionable diagnostic information. The Zacks Consensus Estimate for the current year has improved more than 100% over the past seven days. The stock price has soared 41.5% month to date.
II-VI (NASDAQ:IIVI) Inc. IIVI develops, manufactures, and markets engineered materials, and optoelectronic components and devices worldwide. It operates through three segments, II-VI Laser Solutions, II-VI Photonics, and II-VI Performance Products. The Zacks Consensus Estimate for the current year has improved 3.7% over the past seven days. The stock price has jumped 32.5% month to date.
General Motors Co. 's GM strong demand for profitable trucks and SUVs is aiding the company's revenues. Its hot-selling brands in the United States like Chevrolet Silverado, Equinox and GMC Sierra are also driving the top line. The Zacks Consensus Estimate for the current year has improved 9% over the past seven days. The stock price has climbed 22% month to date.
Flagstar Bancorp (NYSE:FBC) Inc. FBC operates as a savings and loan holding company for Flagstar Bank that provides commercial and consumer banking services to individuals and businesses in the United States. The Zacks Consensus Estimate for the current year has improved 0.3% over the past seven days. The stock price has risen 17.9% month to date.
Lear (NYSE:LEA) Corp. LEA designs, develops, engineers, manufactures, assembles and supplies automotive seating, electrical distribution systems and related components for automotive original equipment manufacturers in North America, Europe, Africa, Asia, South America and internationally. The Zacks Consensus Estimate for the current year has improved 4.3% over the past seven days. The stock price has advanced 16.6% month to date.
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Pfizer Inc. (PFE): Free Stock Analysis Report
Moderna, Inc. (MRNA): Free Stock Analysis Report
General Motors Company (NYSE:GM): Free Stock Analysis Report
Eli Lilly and Company (NYSE:LLY): Free Stock Analysis Report
IIVI Incorporated (IIVI): Free Stock Analysis Report
Lear Corporation (LEA): Free Stock Analysis Report
Flagstar Bancorp, Inc. (FBC): Free Stock Analysis Report
Fulgent Genetics, Inc. (FLGT): Free Stock Analysis Report
BioNTech SE Sponsored ADR (BNTX): Free Stock Analysis Report
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