California, Florida and Texas – America's three most populous states – set new COVID-19 daily case records Wednesday, and Texas temporarily halted its reopening plans. Nevada and Washington state mandated wearing masks in public amid troubling COVID-19 caseloads. Disney (DIS, -0.6%) is delaying the opening of Anaheim's Disneyland, while Apple (AAPL, +1.3%) announced it would re-close more than a dozen retail locations in Florida.
The steady stream of negative coronavirus headlines looked like it would sink stocks early Thursday, but investors eventually found reasons to buy.
Weekly jobless claims were yet again lower, at nearly 1.5 million, and continuing claims were better than expected at 19.5 million. News that banking regulators are going to loosen Volcker Rule restrictions propped up financial stocks such as JPMorgan Chase (JPM, +3.5%) and Bank of America (BAC, +3.8%), and gave the broader markets a little oomph, too.
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A late-day rally drove the Dow, which had declined by as much as 236 points earlier in the day, 299 points higher – a 1.2% gain to 25,745. The S&P 500 finished up 1.1% to 3,083, the tech-heavy Nasdaq gained 1.1% to 10,017, and the small-cap Russell 2000 closed 1.7% higher to 1,413.
Wall Street is caught in a tug-of-war. On the one hand, improving economic data continues to be wind in the bulls' sails. But action in regular hours and futures alike show that investors aren't exactly ignoring intensifying concerns that states might have to clamp down once again to slow the spread of COVID-19.
"We believe developed market policies for combating COVID-19 are shifting away from lockdowns and towards minimally acceptable strategies such as mask wearing, hand washing and contact tracing," writes Alastair George, an analyst with Edison Investment Research. "Compared to full lockdowns, the economic cost of these policies is significantly reduced. As a result, markets have been rising even as the biological effectiveness of a less intrusive approach remains unproven."
No one knows for certain the direction of the pandemic from here, so the best that investors can do is have a plan for whatever comes their way.
If you believe that Wall Street has priced in far too much optimism about the speed of America's bounce-back, these "bear market" funds – which largely outperformed the S&P on the last trip down – could serve as protective positions. If instead you want to stay in high-quality names that should run once the bull market sheds this bout of uncertainty, consider these 20 durable stocks that are well-positioned for the current economic environment and have the financial wherewithal to grind through a longer road to recovery.
Another way to play the next bull market, though, is to stack your portfolio with diversified funds whose thin expenses won't make a dent in your future performance. Here, we look at a baker's dozen of low-cost Vanguard funds (some with ETF alternatives) to ensure you're in position to join the next bull run.
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