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Afternoon Note

Bigger Rotation

By Charles Payne, CEO & Principal Analyst
8/10/2020 1:49 PM

Coming into the second quarter (2Q20), Wall Street was bracing for the worst 2Q20 financial results ever. While the numbers are not pretty; they have been decidedly better than the consensus.   Moreover, results and guidance have had a positive impact on underlying share prices- often sending shares rocketing higher.

2Q Financial Reporting

443 Companies

 

Revenue

 

Earnings

Beats

63%

82%

Misses

37%

15%

Blended Change

-31.7%

-10.5%

Blended Consensus

-43.0%

-11.8%

 

I continue to point out how difficult it will be for broad market indices to rally without a bigger rotation into value stocks, and last week (especially on Friday) underscored that complex issue. The two sectors heavily populated with mega-cap and other growth names were the only decliners.

Last week, Industrials enjoyed the strongest performance, followed by Financials, which is overwhelmingly favored by Wall Street experts to be the outperformer for the second half of 2020.

And they are continuing to be the strongest sectors today.  The Dow that is up over 260 points, while the Nasdaq is down 50 points, and the S&P 500 is slightly higher.  FAANG are down, except for Apple (AAPL).

S&P 500 Index

+0.16%

 

Communication Services (XLC)

 

-0.15%

Consumer Discretionary (XLY)

+1.13%

 

Consumer Staples (XLP)

+0.32%

 

Energy (XLE)

+2.26%

 

Financials (XLF)

+0.52%

 

Health Care (XLV)

 

-0.36%

Industrials (XLI)

+2.02%

 

Materials (XLB)

+0.02%

 

Real Estate (XLRE)

 

-0.15%

Technology (XLK)

 

-0.23%

Utilities (XLU)

 

-0.22%

There are still almost three hundred S&P 500 names down for 2020, but the winners are finally beginning to expand. More names joined the winners this past week, and their average gain continues to stretch.

 S&P 500 Winners

S&P 500 Losers 

NASDAQ Winners

NASDAQ Losers


 

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