Cyclical Versus Growth Stocks During COVID-19

Here is a daily recap of the S&P 500 broken down by sector followed by sector heat map as investors weigh cyclical versus growth stocks during COVID-19. Stocks in heat map are based on the top 10 holdings of each sector ETF. Click on each picture to zoom in. Below is a summary of today’s action on Wall Street provided by CNBC:

Stock futures open flat after Thursday’s wild session

Stock futures were flat on Thursday night following a mixed session in which coronavirus concerns pushed investors further into tech shares. Dow Jones Industrial Average futures were up just 18 points, or 0.1%. S&P 500 and Nasdaq-100 futures traded marginally higher as well.

 

The S&P 500 (SPY) rose +1.05% today. Sector advancers led decliners 9 to 2 as shown below in the sector graph. Gains ranged from +3.44% to less than 1%. Healthcare (XLV) and technology (XLK) suffered minor losses of less than 1%.

The Dow Jones index climbed +368 points (+1.43%) to close at 26,074. The Nasdaq added +69 points (+0.66%) to settle at 10,617.

Cyclical Versus Growth Stocks During COVID-19

Stocks ended higher Friday on coronavirus treatment hopes.

Gilead Sciences said its coronavirus treatment candidate, remdesivir, showed an improvement in clinical recovery and a 62% reduction in the risk of mortality compared with standard care. The news sent Gilead shares up more than 1%. BioNTech’s CEO also told The Wall Street Journal the company’s coronavirus vaccine candidate could be ready for approval by December. The company’s U.S.-listed shares rose 5%.

Netflix jumped more than 8% to a record after Goldman said it now sees a 30% rally over the next 12 months for the company. Amazon also gained 0.5% to an all-time high after Citi hiked its target on the e-commerce giant to a Street high of $3,550 per share.

“On days in which there’s promise of health solution, or that the economy might actually recover faster than expected, you tend to get all your cyclical stocks … leading the charge,” said Michael Arone, chief investment strategist for State Street Global Advisors. Conversely, “when it looks like the economy is going to stall, or the recovery will be slower than expected, investors tend to go back to the old growth stalwarts of technology.”

Friday’s gains put the Dow up 0.9% for the week. The S&P 500 and Nasdaq were up 1.7% and 3.9% in that time period. For the year, the Dow and the S&P 500 are down 8.6% and 1.4%, respectively, while the Nasdaq is up more than 18%.

To be sure, some investors remain concerned as new coronavirus cases continue to pile up. The U.S. reported Thursday more than 63,000 additional coronavirus cases, a record. The country’s seven-day average now stands at more than 53,000 cases.

Key Takeaways….

Notable S&P 500 Movers…

Below I’ve highlighted some notable S&P 500 movers (both winners & losers).

Credit: Sector Graph provided by Sector SPDR app. Sector breakdown provided by Charles Schwab. Sector heat map provided by finviz. Information Credit: News Headlines and quotes were taken from CNBC in the writing of this post.

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7/10/20

S&P 500 Sector Graph

Cyclical Versus Growth Stocks During COVID-19

S&P 500 (SPY)

Cyclical Versus Growth Stocks During COVID-19

Communication Services (XLC)

Cyclical Versus Growth Stocks During COVID-19

Consumer Discretionary (XLY)

Cyclical Versus Growth Stocks During COVID-19

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Consumer Staples (XLP)

Cyclical Versus Growth Stocks During COVID-19

Energy (XLE)

Cyclical Versus Growth Stocks During COVID-19

Financials (XLF)

Cyclical Versus Growth Stocks During COVID-19

Real Estate (XLRE)

Healthcare (XLV)

Industrials (XLI)

Materials (XLB)

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Technology (XLK)

Cyclical Versus Growth Stocks During COVID-19

Utilities (XLU)

S&P 500 Sector Heat Map

 

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