On Monday, the U.S. stock index rose collectively, while large technology stocks led the Nasdaq composite index to a record closing high, up 1.1% to 10056.47; the Dow Jones industrial average rose 153.50 points, or 0.6%, to 26024.96; the S & P 500 index rose 0.7%, to 3117.86.
Apples share price surged more than 2% to a record high after announcing a series of updates at the world wide Developers Conference (WWDC) in 2020. In addition to announcing IOS 14, apple said the new Mac will no longer use Intel chips.
Microsoft shares also rose more than 2%, leading the Dow. Amazon rose 1.5% and Netflix rose 2.6%.
Retail stocks, which are directly related to the reopening of the economy, also rose. Wal Mart rose more than 1% and gap shares surged 8.3% after Wells Fargo raised its target share price as gaps value has been undervalued..
The Dow and S & P 500 both rose more than 1% last week, while the Nasdaq composite rose more than 3%. The novel coronavirus pneumonia epidemic in the US is still a frequent change in the stock market. The novel coronavirus pneumonia cases in some states rose last weekend, and the situation in the southern and Midwestern states was particularly serious as the enterprises reopened. California added 4515 new cases on the 21st, the highest one-day increase during the outbreak. The number of new cases in Florida in the past three days has exceeded 10000. Novel coronavirus pneumonia has also raised concerns about the local recovery of the new crown pneumonia epidemic and threatens the economic re - emergence of these areas.
Novel coronavirus pneumonia is the most troubled state in Arizona, Alabama, California and Florida, Weidner, an economist at Deutsche Bank, said. At least the JustinWeidner is heading for a positive direction in the most serious state. Whether the downward risk of the epidemic to the economic outlook will cause the weakness of the actual economic activities will largely depend on the pressure of hospital treatment in these States and whether the citizens consciously maintain a certain social distance.
JPMorgan: investors should be more cautious in choosing investment varieties in the second half of the year
John Normand, a strategist at JPMorgan Chase, warned that investors should be more cautious in choosing assets over the next six months, following what appeared to be an overheated performance in US stocks. The upside of asset prices driven by unlimited liquidity in the early days has passed, and then the returns of different assets will be differentiated, Normand said. In the early stage of the Federal Reserves release of liquidity, that is, in April and may, basically all assets have risen to different degrees, and the income can be basically obtained by buying assets indiscriminately, which also makes asset prices, including the stock market, begin to go to extremes, and the correlation between assets will also rise.
The one-year correlations of 30 assets, including convertible bonds, commodities and emerging market stocks, are increasing, according to the Normand team. This also shows that since March, the liquidity released by the Federal Reserve is still driving the market up. In a low interest rate environment, the Feds purchase of corporate bonds rather than Treasury bonds has a greater impact on the financial situation, and the negative correlation between credit market spreads and stock prices may decline. At the very least, the negative correlation between US investment grade bonds and the S & P 500 has become unreliable.
Last week was a good example. After the Federal Reserve announced that it would start to buy corporate bonds in the secondary market, the S & P 500 index also jumped along with the credit market, making the trend between the two assets keep converging, and the similarity is close to the highest level since 2006. This also shows that many assets are affected by one main driver: liquidity. This makes the task of creating a truly diversified portfolio more challenging because, so far, the risk factors unique to different asset classes have become more similar.
Moreover, a series of macro risk factors, including credit spread and dollar, have greater impact on the return of the S & P 500 index than corporate profits and related news, which also means that investors are more inclined to trade according to macro-economic factors than previous micro factors.
However, Normand also pointed out that the high correlation of these assets will usually return to the long-term average in the next few months, partly because the pace of quantitative easing by the Federal Reserve will slow down, which in turn will cause the valuation of industries and companies to be re priced. This change will become more obvious in the second half of this year. Novel coronavirus pneumonia, especially the debt of developed countries, is likely to be more closely related to the debt of the developed countries in the second half of this year, especially in developed countries, because the yields of developed countries are close to or below zero, and many emerging market countries may still face the risk of sovereign default and the recurrence of new crown pneumonia, Norman said. As a result, high-grade corporate bonds in developed countries will become more and more popular as the environment deteriorates, because it may also become the preferred target of the Federal Reserve to purchase bonds. In terms of stocks, investors can choose those stocks that are less affected by the epidemic, such as technology, communication stocks or anti epidemic medicine stocks, and try to avoid cyclical stocks and defensive stocks. Source: First Financial Editor: Yang Bin_ NF4368
However, Normand also pointed out that the high correlation of these assets will usually return to the long-term average in the next few months, partly because the pace of quantitative easing by the Federal Reserve will slow down, which in turn will cause the valuation of industries and companies to be re priced. This change will become more obvious in the second half of this year.