July Market Recap: Stocks Rally Despite Being Overstretched And Correction Concerns

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U.S stocks raced higher on the first trading day of the month as a handful of stocks kicked off at the back of hefty gains in July. The tone in the stock market remained bullish as investors reacted to better than expected earnings results amid a challenging business environment fuelled by the COVID-19 pandemic. Here is a look at the July Market Recap:

Market Performers

Tech companies continued to elicit bid tones in the stock market, most of them having shown how resilient they are at the tailwinds fuelled by COVID-19. Advanced Micro Devices, Inc. (NASDAQ:AMD), QUALCOMM, Inc. (NASDAQ:QCOM), and Whirlpool Corporation (NYSE:WHR) continued from where they ended last month racing higher outperforming the overall stock market. The trio has already posted double-digit gains outperforming the S&P 500, which was up by 6% in July. PulteGroup, Inc. (NYSE:PHM) and Hanesbrands Inc. (NYSE:HBI) also continue to outperform the overall stock market.

While the focus has been on e-commerce companies and companies supporting the working from home trends, chipmakers also continue to outperform the overall stock market. For instance, Qualcomm and AMD have posted stellar results in recent months, a development that has seen them continue to edge higher in the market.

The bullish tone around AMD and Qualcomm stems from the growing demand for chips expected to support the development of 5G devices and networks going forward. Qualcomm is up by more than 67% over the last five years and looks set to continue outperforming the overall market supported by a resilient core business.

The Laggards

Walt Disney Co (NYSE: DIS), on the other hand, has taken a significant beating in the aftermath of its theme park remaining shut amid the COVID-19 pandemic. While the stock has bounced back after plunging to four-year lows in March, it is still down for the year.

Amidst the underperformance, it goes without saying that the theme-park giant has limitless potential, given the diverse nature of its core business. The company’s movie studios continue to produce blockbuster content.

The unveiling of a content streaming service should also provide the much-needed buffer for shielding the company from losses experienced in the theme park segment. The future can only be bright for Disney, given its diversified streams of revenue.

The real estate sector, on its part, faces an uncertain future even on remaining resilient so far. The havoc-causing COVID-19 pandemic has for starters made it difficult for most people to pay their rent on most of them being rendered jobless. Over 30 million Americans are unemployed, with most of them clinging on the unemployment benefits offered on the federal and state level.

In contrast, the COVID-19 pandemic has also forced a number of people to rethink their living situation. The result has been a spike in the number of people opting for home buying. Equity Residential Real Estate Investment Trust has remained resilient amidst the mixed sentiments in the market.

The ETF rental collection rate has only tanked by 3%, backed by a strong occupancy rate of 95%. Rental rates have remained resilient with demand slowly recovering as people come to terms and adjust their lives to the COVID-19 pandemic.


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