5 Biggest Wall Street Stories of the First Nine Months of 2020


The coronavirus pandemic played foul in the stock market for most part of the first nine months of 2020. After slipping into bear territory in March, Wall Street staged an astounding rebound, buoyed by a surge in technology sector, massive stimulus program, and hopes of a coronavirus vaccine. In fact, the Wall Street wrapped up the best August in 36 years.

The rally fizzled in September — a historically weak month — on resurging coronavirus cases and concerns over elevated valuations. All the three major indices are on track for their first monthly declines since March. Despite the recent losses, the S&P 500 and the Nasdaq Composite Index are on course for their best two-quarter winning streaks since 2009 and 2000, respectively.

Below we discuss some of the events that dominated the headlines in the first nine months of 2020 and are worth watching in the rest of the year:

Fed Easing Policy

The Fed slashed interest rate to a range of 0% to 0.25% in mid-March and is expected to keep rates at lower levels until the end of 2023. The central bank will not increase rates until labor market conditions return to the “maximum employment,” and inflation rises to 2% and “is on track to moderately exceed 2% for some time.” As such, it will continue to purchase at least $80 billion a month in U.S. Treasuries and $40 billion a month in mortgage-backed securities to make market movements smooth and “foster accommodative financial conditions.”

Though the U.S. economy has bounced back faster than expected, the central bank warned that the full recovery is still far away and will continue to face risks due to the ongoing pandemic.

In this backdrop of a low-rate environment, investors are in search of juicy yields. And nothing is better than high-yield dividend stocks. Uniti Group Inc. UNIT, with a dividend yield of 6.04%, seems a compelling choice. This real estate investment trust company is engaged in the acquisition and construction of mission critical infrastructure in the communications industry. The stock has a Zacks Rank #2 (Buy) and a VGM Score of B.

Digitalization

The pandemic has accelerated the digital shift, thus driving the e-commerce boom. As large number of consumers avoid direct contact and stay at home, the demand for cloud computing, gaming, e-sports, streaming services as well as online shopping has increased. Additionally, investors continued to pile up software shares, which are apparently more insulated from the impacts of the virus.

Given this, investors could bet on the booming trend with the best-performing stock of this year so far in this space. Zoom Video Communications ZM has surged more than 584% so far this year and has a Zacks Rank #1 (Strong Buy). The company’s cloud-native unified communications platform combines video, audio, phone, screen sharing and chat functionalities, making remote-working and collaboration easy. It has seen solid earnings estimate revision of $1.10 over the past month for fiscal year (ending Jan 2021) and has an expected growth rate of 577.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Race for Vaccine

More than 150 coronavirus vaccines are in development across the world. Among the companies racing for the vaccine, Moderna MRNA is leading the way with the start of its third-stage clinical trial on Jul 27. Pfizer’s (PFE) management said that the vaccine, if proven to be safe and effective by federal regulators, in collaboration with BioNTech could reach Americans before 2020-end. The phase 3 clinical trial data result is expected to be released next month.

AstraZeneca Plc (AZN) resumed the U.K. trial of its COVID-19 vaccine, AZD1222, in collaboration with the University of Oxford, following confirmation by the Medicines Health Regulatory Authority that it was safe to do so. The trial was paused globally after a person who received the vaccine had an unexplained illness. Johnson & Johnson (JNJ) and Novavax (NVAX) also began their phase 3 trials for a COVID-19 vaccine in the United States last week.

Others like Sanofi (SNY) with GlaxoSmithKline (GSK) started phase 1/2 clinical trial and Merck (MRK) begins human trials of COVID-19 vaccine candidate this month. Additionally, Vaxart (VXRT) has received clearance from the U.S. Food and Drug Administration to conduct the phase I clinical trial of its COVID-19 vaccine candidate. The company is developing an oral vaccine to prevent COVID-19.

President Donald Trump expects to have coronavirus vaccine for every American by April. He told in the recent news conference: “Hundreds of millions of doses will be available every month.” Trump added that distribution of a vaccine would begin within 24 hours of it being approved by federal health regulators.

Stock Splits

Two of the hottest stocks – Tesla TSLA and Apple AAPL – split their shares in the ratio of 5-for-1 and 4-for-1, respectively at the end of August. The move made these stocks more accessible to investors and employees, and attracts individual investors, who make small trades.

This is because a stock split creates more shares of a company without changing the underlying dollar value of any single investor’s holdings. By increasing the number of shares available, the company can attract new investors who might otherwise not be able to afford a single share at a high price.

Dow Shake-Up

The Dow Jones Industrial Average has undergone major changes effective Aug 31 before market open. Three stocks, namely Exxon Mobil (XOM), Pfizer (PFE) and Raytheon (RTN), in the blue-chip index were replaced by salesforce.com Inc. CRM, Amgen Inc. (AMGN) and Honeywell International (HON). This is the first reshuffle since 2013.

salesforce.com is the first cloud-software entry into the Dow Jones Industrial Average. The inclusion of Amgen indicates the rise of biotech as the race for COVID-19 vaccine continues while Honeywell makes a comeback after 10 years. After the reshuffle, UnitedHealth Group (UNH) has become the most heavily weighted component in the Dow, followed by Home Depot (HD) and Amgen (AMGN). salesforce and Honeywell occupied the sixth and 11th positions in the index, respectively. 

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it’s predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce “the world’s first trillionaires,” but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks’ 3 Best Stocks to Play This Trend >>

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