For Immediate Release
4 GARP Picks to Shield Your Portfolio from September Meltdown
The already muted month of September witnessed another day of Wall Street meltdown yesterday. The Dow Jones Industrial Average fell as much as 509.72 points or 1.8%. The S&P 500 and Nasdaq Composite dived 1.2% and 0.1%, respectively on Sep 21, lower than the previous day’s close. This was the fourth straight day of losses for the S&P 500.
Although technology stocks registered a last-hour rebound from their earlier week’s losses (primarily on growing positive market sentiment related to Microsoft’s plan of $7.5 billion acquisition of ZeniMax), they could not offset the collective sharp fall in stocks of major healthcare and financial benchmark participants yesterday.
The Economic Unrest at a Glance
The new wave of coronavirus cases in the United States following a rushed ‘unlocking’ and the forecast of a significant fall in global GDP in 2020 has pushed the market into sell territory so far in September. This has resulted in another slew of fresh layoffs.
The September data by the Department of Labor showed that from mid-March through late August, 59.3 million Americans filed for unemployment insurance. The number of insured unemployed workers was 13.3 million in late August. Though this was lower than the peak achieved in mid-May (25 million), the figure still exceeds the majority of market watchers’ initial projection as they had expected a faster broad-based recovery.
The Fed’s last-week’s economic outlook (that signaled that interest rates are likely to stay near zero through 2023) along with the grim pandemic scenario in Europe played a crucial role in dragging market sentiment down.
Added to this, the President’s recent plans to introduce a stimulus bill of a massive $1.5 trillion are also indicative that an economic recovery is unlikely any time soon. In this regard, we note that the International Monetary Fund’s (IMF) estimate about the coronavirus-induced cumulative stimulus package was $18 trillion globally for 2020. The United States’ already-running stimulus packages currently occupy 13.2% of its GDP. This is undoubtedly going to create further pressure on the Federal Reserve balance sheet.
The Contrary Story
Amid these, the U.S. Bureau of Labor Statistics’ September-released data was positive, claiming a 1.4% improvement in non-farm employment, reduction in the total number of unemployed Americans to 13.6 million and lowering of the unemployment rate to 8.4%.
Needless to say, the contrasting economic data has completely baffled the investment world.
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