Updated: Nov 19, 2020
Stocks climbed as giant tech companies rallied in a shift back to the safety trade that has powered this year’s gains amid speculation the economic recovery will be slow with a virus resurgence.
The S&P 500 rose toward its highest since Sept. 2, while the Nasdaq 100 jumped more than 2%. Heavyweights Apple Inc. and Amazon.com Inc. surged alongside some stay-at-home shares that were hit hard by this week’s selloff such as Zoom Video Communications Inc. The Dow Jones Industrial Average underperformed, and banks slumped. The Russell 2000 Index of smaller stocks halted a two-day rally which was driven by expectations that a return to normal would be on the horizon after positive vaccine developments. Treasury futures were little changed, with the cash market closed for a U.S. holiday. The dollar advanced.
JPMorgan Says Market Is on Verge of a Sustained Rally in Value.
JPMorgan Chase & Co. strategists are betting that the latest record shift into value stocks can endure much longer after years of lagging growth equities.
“Our equity strategy team believes that we are on the cusp of a sustained rally in value comparable to what we saw in 2016-2017,” said strategists including Davide Silvestrini and Marko Kolanovic. “This rotation has room to continue much further given the material underperformance we have witnessed in recent years.”
JPMorgan analysts are weighing in on the potency of a sudden change in market leadership after the world’s cheaper stocks surged the most ever relative to their faster-growing peers on Monday. The MSCI All-Country World Value Index jumped almost 6% at the start of the week, while its growth counterpart fell 2% as investors rotated out of defensive technology names and into shares that have suffered from the lockdowns.
Bargain-seeking investors swooped in to scoop up big tech, with the Fab 5 leading the broader market higher.
Apple announced three new Mac computers late-Tuesday, powered by its M1 chip instead of Intel (NASDAQ:INTC) processors, marking the end of its 15-year relationship with the chipmaker.