As COVID-19 continues to spread across the world, the US has overtaken other countries as the leader in the number of infected people, with more than 141,000 confirmed cases. Investors are now turning their attention to policymakers last week as a number of measures to boost the economy.
With the US and the global economy on brink of a recession (or perhaps it’s already in one), the focus last week was on congress, which after numerous failed attempts managed to pass a $2.0 trillion stimulus bill, the largest ever in recorded history. The bill was voted on and signed into law on Friday, but the anticipation not only kept investors on the edge but also resulted in the biggest three-day rally of the stock market since 1931. In this way, the Dow Jones Industrial Average surged by 13.68% last week, while the S&P 500 and the NASDAQ Composite advanced by 10.93% and 9.53%, respectively.
The stimulus package is one of the most far-reaching pieces of legislation ever introduced. It includes direct payments to individuals and to households with children, an extension of unemployment benefits, allocations to state and local governments, corporate aid, loans to small businesses, and allocations to the healthcare system.
As a result, the stock market extended its gains on the back of the stimulus bill passing and the mood of investors was not even overshadowed by the initial jobless claims data, which showed an increase of 3.0 million to 3.28 million, much higher than the consensus estimates of 1.0 million. This represents the highest level of jobless claims on record.
While investors celebrated the rally, many experts suggest that it may be too early to pop the champagne as the worst might still be ahead of us. The rally of the last week is considered a temporary event that usually happens during recessions, but more stable growth is unlikely to start any time soon. With most of the US still on lockdown from the coronavirus, it’s too early to make predictions when the economy will be able to run at its full force.
In the meantime, amid the broader market growth, some stocks have had a better week than others. One group that had a particularly great week are airline stocks, such as Delta Air Lines, Inc. (NYSE: DAL) and American Airlines Group Inc (NASDAQ: AAL), which surged by more than 30%. The growth came on the back of investors expecting the stimulus deal to provide some relief funds for airliners, which are suffering on the back of travel restrictions from the pandemic. However, despite the rally, airline stocks remain deep in the red following a massive drop in the previous weeks.
The rally registered by Delta and American Airlines Group did not go unnoticed among Financial Advisors. Both stocks ranked among the most-searched tickers according to data compiled by TrackStar, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors.
Some other newcomers to the list of most-searched tickers represent a group of companies that were hit particularly hard by the economic downturn. These companies are specialist small-business lenders, also known as Business Development Companies (BDC). Ares Capital Corporation (NASDAQ: ARCC), Golub Capital BDC Inc (NASDAQ: GBDC), and TPG Specialty Lending Inc (NYSE: TSLX) made the list of most-searched tickers. Similar to airline operators, shares of BDCs rallied last week, but not enough to recover. BDCs were created to provide funding to companies that occupy the middle-market niche (they are too small to issue bonds, but are too big to go to community banks) and since the financial crisis, they were an important piece of the lending market. However, as the economy is close to a recession, investors rushed to dump these stocks.
Last but not least, the stock that was the most searched among Financial Advisors last week was The Boeing Co (NYSE: BA). Boeing had been on the list for the past several months, but last week it jumped from the 12th spot to the first.
There are several reasons why Boeing got in Financial Advisors’ spotlight. The company’s stock appreciated by 64% last week, although it still remains more than 50% in the red year-to-date. Last week the company made the headlines as the Congress was debating the stimulus package. According to reports, the $17 billion federal loan program for businesses considered critical for national security included in the bill was added specifically with Boeing in mind. However, on Friday, Treasury Secretary Mnuchin said that Boeing does not intend to take advantage of the government aid, which caused the stock to lose the momentum of the previous days.
At the same time, other reports suggested that Boeing is on track to restart the production of 737 MAX, which has been grounded for months after a series of issues. The company’s plans are currently disrupted by the coronavirus outbreak, but it expects to restart production by May.