Stock prices reacted positively after retail sales data surprised to the upside and the Federal Reserve unleashed additional measures to stem the damage from COVID-19. However, the persistent increase in new COVID-19 cases and related hospitalizations weighed on stocks. Healthcare stocks fared well.
Last week, the Commerce Department reported an 18% surge in retail sales in May from April. The tally topped the 8% growth economists expected.
The Federal Reserve expanded the scope of its $750 billion emergency corporate loan facility to buy individual corporate bonds.
Arizona, California, Florida, and Texas set new records for daily increases in COVID-19 cases. These increases offset the decline in cases in the New York metro area and caused the nationwide case count to top 2.25 million.
For the week ending June 19, the S&P 500 (SPY) gained 1.5%.
Eight of the 11 sectors advanced.
Healthcare (XLV), information technology (XLK), and communication services (XLC) led the S&P 500 (SPY).
Utilities (XLU), energy (XLE), and real estate (XLRE) lost ground.
Eight of the S&P 500’s top 10 winners were healthcare stocks. Three of them gained double-digits. Two information technology stocks also gained double-digits to figure amongst the top 10 winners.
1. Double-digit healthcare winners
Shares of Incyte (INCY), Eli Lilly (LLY), and DexCom (DXCM) rose over 10% last week.
Incyte shares surged after enrollment started for Phase 3 trials of baricitinib in hospitalized COVID-19 patients. Eli Lilly shares rose on news of the drugmaker’s key breast cancer treatment Verzenio meeting the main goal of a Phase 3 study.
Shares of continuous glucose monitoring systems developer DexCom rebounded after Bank of America analysts reiterated their Buy recommendation and raised their share price objective to $500 from $375.
2. Other healthcare winners
Shares of Amgen (AMGN), Cerner (CERN), Hologic (HOLX), Regeneron Pharmaceuticals (REGN), and Vertex Pharmaceuticals (VRTX) recorded strong single-digit gains, advancing between 9% and 10%.
3. Double-digit information technology winners
Semiconductor equipment maker Lam Research (LRCX) and electronic measurement systems provider Keysight Technologies (KEYS) rose 11% each. Morgan Stanley made positive comments on the long-term outlook for Lam Research and raised its share price objective to $334 from $253. Investors returned to Keysight shares after they lost 13% in the first half of June believing supply chain disruptions from COVID-19 would be temporary.
Looking ahead to the week of June 22
* Wall Street will continue to focus on the trend in COVID-19 cases & hospitalizations amidst efforts to restart economic activity.
* Jobless claims will be in focus after last week’s 1.5 million tally marked the slowest rate of decline in claims since early April. The data raised worries of a slowdown in rehiring. Economists will look for this week’s data to either confirm or refute rehiring worries.
* Nike (NKE), Accenture (ACN), IHS Markit (INFO), McCormick (MKC), and Darden Restaurants (DRI) are scheduled to report earnings.
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