Many of the Dow Jones' economically sensitive components pushed higher on Tuesday on the back of slightly better COVID-19 data from a few U.S. hotspots.
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A day after California's widespread business closings knocked the major indices down a couple rungs, investors got word of declining daily caseloads of COVID-19 in that state and hard-hit Florida and moved to prop up more cyclical sectors.
Caterpillar (CAT, +4.9%) helped lead the Dow higher Tuesday, and energy stocks such as Exxon Mobil (XOM, +3.3%) and Chevron (CVX, +3.5%) also advanced the cause.
Financial stocks were more muted, however, after Wells Fargo (WFC, -4.6%) not only reported its first quarterly loss since 2008, but became the latest marquee company to cut its dividend, hacking its payout from 31 cents quarterly to 10 cents. Indeed, financials (XLF, +0.6%) were the weakest of the 11 market sectors.
The major indices all enjoyed a flourish to finish Tuesday's trading. The Dow Jones Industrial Average led the way with a 2.1% gain to 26,642. The small-cap Russell 2000 logged a 1.6% gain to 1,426, and the S&P 500 improved 1.3% to 3,197. And the Nasdaq lagged again, up 0.9% to 10,488.
Can Emerging Markets Keep Rallying, Too?
Like the Nasdaq, red-hot emerging markets such as China, Taiwan and India have started to cool just a smidgen. But a little near-term weakness might spell opportunity for an entry into these and other high-growth markets, if their economic recoveries persist.
Consider that while the International Monetary Fund (IMF) is projecting U.S. GDP to decline 8% in 2020, China's economy could actually grow by 1% – great news for some of the country's top stocks.
Barclays analysts see at least shorter-term resilience out of China.
"We expect Q2 GDP to rebound to 3.5% y/y from -6.8%, driven by strong IP (supply side), and resilient exports and rebounding infrastructure investment (demand side)," they write. And on the coronavirus front: "The new outbreak appears to be under control in China, as no new local infection cases were reported in the past four days (6-9 July)."
Meanwhile, in 2021, the IMF is looking for 8.2% expansion from China, and 5.9% economic growth across EMs more broadly.
If you like to live a little dangerously, you can attack emerging markets via individual stocks such as these 11 rebounding picks. However, if you're a buy-and-hold investor who wants to add this 1-2 punch of geographical diversification and growth potential without sticking your neck out that far, funds might be the better route for you.
Read on as we analyze these 10 emerging markets ETFs, which provide different types of exposure for every kind of investor, whether you're looking for plain-vanilla breadth, a tech-heavy portfolio, feel-good ESG stocks or even fixed income.
