Even with a surge in U.S. Coronavirus cases, stock market futures were up ahead of trading on Monday. After a shortened trading week, Dow Jones Industrial Average futures were up 260% on Sunday night, the equivalent to around 1% in the market.
Futures often correlate strongly with real market growth, suggesting that stocks will be up today. This news comes after more than 140,000 new Coronavirus cases were reported over the weekend, one of the worst surges since the outbreak started earlier this year.
Key Developments From the Past Week
As is usual in the financial world, mixed signals are coming from top analysts around America. Some believe that the stock market will flatten out and recede again before the economy recovers. Others are predicting high volatility and some interesting opportunities to trade both on the highs and the lows.
One particularly noticeable development to emerge over the weekend was news that Berkshire Hathaway (NYSE: BRK.B), Warren Buffett’s investment company, would buy $9.7 billion worth of assets from Dominion Energy (NYSE: D). The assets are linked to Dominion’s natural gas segment, suggesting that there’s strong confidence in the energy market today.
Berkshire Hathaway has also invested heavily in General Electric (NYSE: GE) in recent weeks. Analysts at the firm believe that now is the time to invest in struggling energy businesses. The high-demand nature of the energy industry indicates that an upside is likely once the market and the wider economy begin to recover.
Analysts are also upbeat about pharmaceutical stocks, especially those that are involved in research for Coronavirus treatments and vaccines. Pfizer (NYSE: PFE) is currently developing a vaccine candidate that helps patients to develop more antibodies than people who have recovered from the Coronavirus. Although a vaccine is still unlikely in 2020, treatments that come from clinical trials could become significant revenue drivers in the coming years. The virus spreads rapidly, is highly contagious, and has a high morbidity rate compared to similar viruses. Treatments will be essential to private and publicly funded health programs in the near future.
Stock Market Volatility is Still Likely this Quarter
Even with some interesting developments in the market, volatility will still be a major concern for investors this quarter. Stock options should be considered carefully within the wider context of any portfolio. Dips can represent strong buy opportunities, but it’s important to consider that stocks may take months to climb back to their 52-week peaks, and some may remain down indefinitely.
Research, diversification, discipline, and a focus on portfolio goals will all be key during this unprecedented period.
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