Nate Katifa | Aug 26, 2020 07:17
Perhaps the best indicator of the separation occurring in the economy is that Nasdaq has crushed the Dow Jones Industrial Average, which is composed of more traditional stocks. Through the first half of the year, the Nasdaq gained 12.1%, while the Dow lost 9.6%.
That pattern looks set to continue in the second half of the year as the conditions that favor tech stocks -- a pandemic pushing people to work from home, shop online, and avoid social gatherings as well as spending on things like restaurants and travel -- haven't changed.
Meanwhile, a number of Dow stocks are particularly vulnerable to the pandemic, such as McDonald’s (NYSE:MCD), Nike (NYSE:NKE), Disney (NYSE:DIS), and Boeing (NYSE:BA), and their results are likely to be ugly in the second half of the year.
Energy components like ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) also look weak with oil prices still low, and financials like JPMorganChase (NYSE:JPM) and Goldman Sachs (NYSE:GS) could sink as the Federal Reserve recently warned that the 34 biggest banks could suffer as much as $700 billion in losses under a worst-case scenario.
Written By: Nate Katifa
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