Market Soars to Set Records Despite Political Unrest

January 6, 2020 was one to remember, because the market indexes soared though there was political unrest at the US Capitol.   

Market Soars to Set Records Despite Political Unrest 

Wednesday, January 6, 2020 was a day of news. Investors particularly look out for such days as part of online stock trading. Despite the political events that rocked the US Capitol, the Dow set a record high at close on Wednesday, soaring past 31,000 at a rate that was the fastest in 2 years. The stock market, in general, experienced a rally. 

Political Unrest Did Nothing to Hamper Gains

The US Capitol was stormed by supporters of President Trump, with the intention of disrupting the joint Congress session where Joe Biden’s win over Trump was certified. With the runoff elections in Georgia, the Democratic Party won both the US Senate seats, reports MarketWatch quoting the Associated Press. 

Dow Jones closed at 30,829.40, a rise of 1.4% or 437.80 points. It had earlier recorded a 31,022.65 all-time intraday high. The S&P 500 had a gain of 0.6%, 21.28 points, closing at 3,748.14. Nasdaq Composite closed lower by 0.6%, 78.17 points to close at 12,749.79. 

What Caused the Growth?

Robertson Stephens Wealth Management chief economist Jeanette Garretty opines that the key aspect was how Biden’s policies would affect spending. Investors are hopeful of Biden’s strategies leading to more money for individuals. Garretty also points out investors’ assumption that states would get more money for getting the vaccine to the public. With the widespread use of the vaccine, investors believe the economy could reopen again.  

We also saw the 10-year Treasury yield rise 8.6 basis points and finish higher than the 1% level, setting a nine-month record. 

Not Everything Was Rosy 

The Automatic Data Processing report focusing on employment in the private sector revealed that jobs saw the first drop since April. Jobs in the private sector dropped to 123,000.   

The tech stocks index XLK fell too. 

Days like these indicate the market could grow on the basis of hopes of a brighter near future, despite adverse events of the present. A clear understanding of the market situation and getting the prediction right are important to succeed in stock trading. Reputable online stockbrokers provide free stock trading software for investors.  

What to Do If the Stock Market Soars Overnight?

The stock market could rise or fall unexpectedly due to various situations. A sudden market rally could excite you, but it’s important to make the right decisions.      

What to Do If the Stock Market Soars Overnight?

There can be many situations in stock trading when things don’t quite go to plan. While you can expect the unexpected, advanced stock market trading software can guide you through the trading process with greater certainty. 

A Stock Market on an Overnight Rise

It could well be that the stock market skyrockets to record levels unexpectedly. There isn’t room for any knee-jerk reactions. So what should you do when faced with a situation where you suddenly have a market reaching for the stars?

Is It Just a Fad or a Genuine Factor?  

First, take stock of the situation. Analyze why the market is rising: 

  • Is there a solid reason for the market rising? 
  • Or is this the result of overexcitement on the part of investors? 

Sometimes, investors look at the long-term picture, beyond any existing crisis the markets are going through. 

If the rally lasts for just a single day, it’s not worth considering since it could be some emotional reaction from investors that isn’t based on reality. The bottom-line is, you need to ensure the skyrocketing market rally is grounded on reality or a solid case for potential growth in the long term.

These stocks basically represent companies that produce consumer staples, utilities and essential services. These are products that people need even if the economy fails. 

On the other hand, if you select growth stocks when the market is on the rise, you will be paying more than its true value. 

Hartill also suggests gold as a great hedge.      

Survey Reveals Investors’ Hopes for a Bright 2021

Investor sentiment points to a great 2021. Could investors’ optimism prove to be true? Can they be relied on for trading decisions? 

Survey Reveals Investors’ Hopes for a Bright 2021

Hard data is essential for making the right trading. That’s why new traders rely on technologically advanced trading platforms as part of online stock trading. If 2020 was a year to forget, the year ahead could be one to remember, if investors who took part in an Investopedia survey are to be believed. 

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Interestingly, the survey is part of the continuous monitoring of Investopedia readers that began even before the declaration of the pandemic in March. Those readers included people right from 18 years of age. This recent survey, however, mostly involved reader investors around 47 years of age who live in the states of Western and Southern United States. 

  • These investors still favor US equities as their first preference 
  • Their second and third options are stocks from the Chinese and the emerging markets 
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While Chinese and emerging markets have outperformed US indexes during the last three months as a result of the poor handling of the pandemic in the United States, there have been robust returns for all these markets since April. This preference for US equities probably reveals investors’ faith in the recovering power of the US market. Factors such as comparatively lower inflation, low interest rates, and strong performance from crucial sectors such as technology have played a part in instilling hope. Something else that can instill the desire to start trading is technology in the form of advanced trading platforms offered by reliable online broker dealers.  

Why the Economy Is in for a Boost When Vaccine Takes Effect

Despite the volatility we’ve seen this year, 2021 could see a major economic boost from the second quarter if the vaccines end up being effective. 

Why the Economy Is in for a Boost When Vaccine Takes Effect 

The uncertainty over the economy and stock market that began back in February and March with the onset of the first wave of Covid-19 in the United States has returned with the latest wave of the pandemic. While day trading is affected by short-term changes in market dynamics, the current uncertainty and volatility have the potential to affect long-term approaches as well. The pandemic is expected to be eradicated when the vaccine finally gets to the people.      

Why Successful Vaccines Would Boost the Economy in 2021

Effective vaccines could give a major boost to the economy in 2021’s second quarter, according to David Rosenberg, a major investment strategist. He, and many other analysts believe that any factor that would take away the Covid danger could only benefit the economy. Anything that grabs people’s attention away from the pandemic could make them engage in their regular activities, such as working, hanging out, investing in products and services, and thereby boosting the economy. 

Rosenberg believes that working from home isn’t necessarily bad because people are increasingly finding the arrangement productive. 

  • It therefore doesn’t affect performance. More and more employers would therefore allow this. 
  • So, even if the work-from-home arrangement continues, which, in all likelihood, it would for some time, businesses and organizations would maintain or increase their productivity. 
  • While that would cut short on travel, an impression of normalcy and the pandemic threat passing away would lead people to spend more since businesses aren’t losing productivity despite the work-from-home arrangement. 
  • A successful vaccine also takes away the fear factor for people. 

The Success Factor of the Vaccines

With the number of cases rising, nearly a billion doses need to be manufactured. That’s a lot more than the initial samples made. The challenge lies not just in the manufacture, but also the supply, delivery and storage. That poses a huge logistical challenge. And there’s also the danger of whether the virus could mutate into something else, in which case the current vaccine wouldn’t be effective. As of now, though, the efficacy level is high and in the current state of the virus, the vaccine may succeed in sparking an economic boom in 2021. 

The experimental Covid-19 vaccine candidate jointly developed by Astrazeneca and the University of Oxford has reportedly delivered 90% efficacy in late-stage trials. Pfizer ($PFE) and partner BioNTech ($BNTX) have reported potential cures too with their vaccine, while Moderna ($MRNA) has also reported high efficacy levels. The markets have reacted positively to the news, starting the week from November 23 — 26 with a rally. Rosenberg expects inoculations to begin in 2021’s first quarter. If so, he expects the second quarter to witness a massive boom. 

These are aspects you need to consider while trading stocks online, when you are strategizing for 2021 and beyond. 

What the New York City Index Tells about Economic Recovery

New York City’s economic recovery index can give you an idea regarding how the American economy is recovering from the Covid-19 pandemic. 

What the New York City Index Tells about Economic Recovery

New York City is the economic hub of the United States, and it clearly reflects the state of the country’s economy. It does help to monitor the economic situation of the city for successful online stock trading.  

The New York City Recovery Index for the October 31 week recently returned a 52.6 out of 100 score. As reported by Investopedia’s Caleb Silver, this is a slight improvement in the city’s recovery but there’s still a long way to go to get back to where it was before the pandemic. The past week has seen a lesser number of Covid-19 hospitalizations. Unemployment claims have also reduced, while real estate sales have picked up.

COVID-19 Hospitalizations Reduce

The most encouraging factors were the decrease in Covid-19 hospitalizations and unemployment.

  • The week’s 7-day average of daily hospitalization cases was 37.
  • This was a 27.5% drop from the past week’s figure of 51.
  • Reported cases, however, kept rising.
  • The city did report an infection rate of 2%, which is the highest percentage in the past 4 months.

Unemployment Improves

  • At 14.4%, New York City’s unemployment figures are among the highest in the country.
  • But the week posted the third consecutive week of decreasing unemployment claims.
  • The figure of 23,239 cases for New York City was lower than the week before by 5,212 cases.
  • Despite that improvement, claims have still quadrupled from last year.
  • Unemployment has been felt the most in hotels, restaurants and theaters.  

These figures show that there still is a long way to go for the economy to get back to how things were before the pandemic. This information can help you plan your trading decisions along with advanced trading platforms.

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What Is Coverage Ratio and How Calculating It Helps?

Company research is an essential element of making stock trading decisions. Helping in this research are calculations such as the coverage ratio.    

What Is Coverage Ratio and How Calculating It Helps? 

Coverage ratio is the measurement of a company’s capability to meet its financial obligations such as dividends and interest payments as well as its debt. It significantly helps in company research and is something you rely on along with advanced trading software.  

A higher coverage ratio makes it easier for the company to fulfil its financial obligations. Investors and analysts study the historical trend of a stock’s coverage ratios to detect whether the financial position of a company has changed.    

How Crucial Is the Coverage Ratio?

  • Coverage ratios help detect companies that could be heading for troubled financial waters. 

Calculating Coverage Ratio

  • Interest coverage ratio/Interest earned ratio

It measures a company’s ability to pay the interest of its debt.

It is calculated as: 

EBIT / Interest Expense

EBIT refers to earnings before interest and taxes. A satisfactory interest coverage ratio is usually 2 or more.  

  • Debt Service Coverage Ratio (DSCR)

It measures the ability of a company to pay all its near-term debt principal plus interest payments 

It is calculated as:

Net operating income / Total Debt Service

A figure of 1 or above indicates the company’s earnings are sufficient to cover all debt obligations

  • Asset Coverage Ratio

It measures a company’s balance sheet assets.

It is calculated as:

Total Assets – Short-term Liabilities / Total Debt

Total assets are buildings, machinery, inventory, land and other such tangible assets

A 1.5 ratio is satisfactory for utilities, while a ratio of 2 is satisfactory for industrials. The coverage ratio is one of the many indicators that can help stock traders gauge the worth of a business. It helps while trading stocks online.  

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Dividend Stocks to Deal with the Market Uncertainty

A steady flow of income through some solid dividend stocks can help calm the mind of any investor agitated by the uncertainty doing the rounds.

Dividend Stocks to Deal with the Market Uncertainty

Covid-19 cases are rising again in Europe and the US, causing further gloom. European countries are thinking of imposing lockdown again, generating fears of another economic slowdown. These are concerns that dominate online trading now. But all is not lost, and there are some great opportunities out there particularly if your interest is for stocks providing reliable income.   

Investors seek dividend stocks if they’re looking for regular income. Sometimes, these stocks come really cheap. That raises your potential for profits. Motley Fool analyst David Jagielski particularly has a few stocks in mind. Whatever the circumstances have been, these stocks have paid shareholders regular income.  

CVS Health ($CVS)

The company has been down 20% since the beginning of 2020, despite the S&P 500 climbing nearly 6%. Though the company experienced a decline, it has managed to adapt to the Covid-19 pandemic and has provided testing locations for patients all through the country as well as telehealth functionalities in almost every state. Sales have managed to be steady. 

The second-quarter results released by the company on August 5 actually revealed year over year sales up by 3% for the period till June-end, touching $65.3 billion. Its net income was reported to be $3 billion, a 54% rise. This improvement was significant enough for CVS to raise its cash and earnings guidance from its operating activities.     

What really makes the stock exciting is that it trades at a P/E (price-to-earnings) ratio much lower than any average healthcare stock listed on the Health Care Select Sector SPDR Fund. While a typical healthcare stock listed on the fund has a P/E ratio of 24 as well as a book value that’s over 4 times, the CVS stock trades at a P/E of only 9 as well as a book value of around 1.2. The quarterly dividend stock is currently at $0.5, a 3.3% yield. That’s higher than the average S&P 500 yield of around 2%.              

Pfizer ($PFE) 

Another healthcare stock in the attention of Jagielski is Pfizer. Pfizer is in the limelight for being in the race to get a Covid-19 vaccine developed. The stock is down 4% in 2020. Comparing it with CVS, Pfizer stock is actually performing better. Still, it isn’t anywhere close to the S&P 500. 

The great news about Pfizer is its BioNTech experimental coronavirus vaccine which is in phase 3 of trials. It has been making significant progress, which could eventually lead to the company applying for Emergency Use Authorization (EUA) by next month. With the vaccine coming through, the company could add $3.5 billion worth revenue in 2021, believes Jagielski. In 2022, that could add $1.4 billion to the company’s revenue. While those figures may not be significant for a company of the stature of Pfizer that earned a revenue of $51.8 billion in 2019, the stock is known for its consistency and the overall value it provides, even without the highlight of a Covid-19 vaccine. The company has earned profits margins exceeding 10% in every one of the previous 10 years.    

Moreover, Pfizer has a P/E of just 15, and its P/B is just 3.3. That’s way below the value of the average healthcare stock. Recently, the company has also been increasing its dividend payments every year. Its current quarterly dividend is $0.38, a yield of 4.1%.          These are just some of the stocks to consider if your strategy is to acquire a steady flow of income that could help tackle the uncertainty the market throws at you. Many trading strategies can be considered, including exchange traded funds (ETFs).

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Standout Stocks with Immediate Growth Potential

For investors with immediate growth objectives, stocks that are poised to rise above their competitors could be what they need.  

Standout Stocks with Immediate Growth Potential 

Are you looking for great growth stocks? Whatever be your investing strategy, you can get started with commission free trading

For immediate growth opportunities, how about stocks that are just breaking away from the other stocks in their segment? These stocks appear to grow faster than the others and fill investors with confidence for the short term at least, says Motley Fool analyst Zhiyuan Sun. With immediate growth prospects, these stocks are for those who want to buy right now and sell when these companies fail to deliver great results.      

Stocks such as these have the potential to provide instant growth though they may not necessarily be long-term options. Make the right trading decisions based on your financial goals, and use advanced trading platforms online. 

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Should You Be Worried about the Slump for Major Indexes?

Tech stocks led the recent slump for the major indexes. That brought the market to correction territory, but the bull market could keep going.    

Should You Be Worried about the Slump for Major Indexes? 

Investors employing long-term trading don’t need to be worried about short-term glitches. That’s exactly what you learn while trading stocks online. But still, it is hard to ignore what happened at the beginning of the second week of September.     

The Recent Tech Slump 

We have been recently seeing a tech slump. On Tuesday, as the markets reopened after a three-day weekend, Dow Jones dropped 2.3%, 632.42 points, to 27,500.89. The S&P 500 dropped 2.8%, 95.12 points, to 3,331.84. Nasdaq too dropped 4.1%, 465.44 points, to hit 10,847.69. This continued from the drops of the previous week. In fact, the Nasdaq dropped 10% from its record close of 12,056.44 on September 2. 

The first week of September saw the Nasdaq Composite ending at 11,313.13 for the greatest weekly decline it has experienced since March. That week also saw the Dow Jones losing 1.8%, closing at 28,133.31. The S&P 500 had a 2.3% drop to finish at 3,426.96. All three indexes suffered there greatest weekly falls since June. Nasdaq thereby entered correction territory, which is a situation where stocks end 10% lower at least from their previous closing high. In fact, data reveals that this was the quickest correction for the index on record. It took just three sessions for Nasdaq to get there. 

Factors Contributing to the Slump 

With the Covid-19 pandemic slowing down economic recovery, high valuations being showered on technology companies, and Trump aggravating US-China trade by threatening to end the United States’ manufacturing reliance on China; it is unclear where are we heading due to these types of events occurring.  

Major Tech Stocks Led the Slump 

The prime contributors to Nasdaq’s reversal were falls by some of the major tech components making up the index – Alphabet ($GOOG, $GOOGL), Amazon ($AMZN), Microsoft ($MSFT), Facebook ($FB) and Apple ($AAPL). These were the stocks that had received extremely high valuations. Investors started worrying whether the sector gains brought about by the market momentum were leading valuations far beyond sustainable levels.    

But what investors need to watch out for is whether the major US indexes can grow apart from the tech giants. It’s important to remember that the world of the pandemic is dependent on these tech stocks for its existence. With these stocks dropping, what scope is there for these indexes? Peter Oppenheimer of Goldman Sachs, however, says that the bull market could still go some way though he believes a selloff in the region of 10% can’t be avoided. 

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Impressive Tech Stock Growth Opportunities Despite Covid-19 Pandemic

There are tech stocks that have not been touched by the Covid-19 crisis, and some have experienced impressive growth.  

Impressive Tech Stock Growth Opportunities Despite Covid-19 Pandemic

Growth and income are the two major goals of investing in the stock market. Whatever be your requirements, you need the services of online stock brokers to get started. 

There Is Growth Around, Just Find It

High-growth stocks would have been considered a luxury as the effect of the Covid-19 crisis sent the market into recession. But safe-haven stocks, the few stocks that aren’t likely to be affected by the Covid-19 pandemic, could offer tremendous growth. Among these are tech stocks that are in huge demand, because the contactless working atmosphere encouraged to prevent the spread of the pandemic has made technology providers such as videoconferencing services indispensable. Also, among these were cloud technology providers, an investment option considered by Motley Fool’s Leo Sun.

High-growth cloud stocks have been successfully shielded from the crisis. Sun particularly remembers CrowdStrike ($CRWD) and Adobe ($ADBE), which have also weathered the storms in the past year. They have managed to experience double-digit growth in revenue even through the tough times. CrowdStrike has experienced a 120% rally this year while Adobe has surged 40%. But they’re still some way from all-time highs.                                  

Growth in the Past and More Growth to Come

CrowdStrike’s revenue in fiscal 2020, ending on January 31, was $481 million – a 93% surge. As the company’s gross margin expanded, its adjusted net loss reduced to $63 million from $119 million. The first quarter saw the growth continue, with year over year revenue rising 85%. There was more than a doubling of its subscriber base, and for the first time since its IPO in 2019, the company posted adjusted profit.

And there’s more to come. CrowdStrike is expecting a 72% to 76% annual rise in revenue in Q2 as well as a 58% to 61% rise for the full year. The company expects a significant narrowing of the full-year adjusted net loss to somewhere in the region of $15.2 million though it doesn’t quite expect consistent profitability.

Impressive, to Say the Least

It’s also been an impressive journey for Adobe in the past few years. It recently had a 24% revenue rise in fiscal 2019 that ended last November. While adjusted earnings soared 16%, revenue stood at $11.2 billion. In the first half of this year, Adobe’s revenue had an annual growth of 16%. The prime contributor to the company’s growth has been its Digital Media unit, which helped compensate for the weakness of the cloud services of its Digital Experience unit that suffered as a result of the Covid-19 pandemic. The company also witnessed a 33% improvement in adjusted EPS as well as an expansion of its gross margin.                      

Adobe expects a year over year growth of 11% and 17% in revenue and earnings in Q3. The full-year expectations are a 14% revenue growth and 24% earnings growth. 

Make use of high-tech platforms for advanced online stock trading. These technological advances can help you make the right decisions.  

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