First-time jobless claims dipped below the 1 million mark, and Apple (AAPL, +1.8%) edged closer to becoming a $2 trillion company Thursday. But the broader markets were mostly sluggish, unable to match yesterday's go-go energy.
The Labor Department reported that 963,000 new people applied for unemployment benefits last week, the first reading below 1 million since mid-March and the latest in a string of positive economic developments.
Meanwhile, Apple cruised higher amid a Bloomberg report saying the tech giant was preparing to bundle its various services, which have helped prop up profits in recent years amid flattening iPhone sales. The project, called "Apple One," could be shared across up to six people and decrease the costs versus buying each service individually.
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"For example, if a family subscribes today to all of Apple's major services plus the highest iCloud storage tier, that would cost about $45 a month," Bloomberg writes. "A new bundle could knock more than $5 off that."
Apple finished Thursday at new record highs and a $1.97 trillion market value.
Meanwhile, Cisco Systems (CSCO) weighed on the broader indices, plunging 11.2% after providing disappointing guidance for the upcoming quarter as corporations slow IT spending.
"Looking forward, with total product orders down 10% year-over-year and no end to the pandemic in sight, the firm substantially guided down for its first quarter and announced that it will be undertaking cost-cutting measures over the next few quarters to reduce its cost structure by over $1 billion on an annualized basis (about 80% coming from operating expense)," write William Blair analysts.
The COVID front wasn't encouraging, either. The U.S. reported nearly 1,500 deaths yesterday – the highest death toll since May – and a stimulus package is no closer to fruition.
The Dow Jones Industrial Average dipped 0.3% to 27,896, while the small-cap Russell 2000 lost 0.2% to 1,579. The S&P 500, just six points from a new bull market as of yesterday's close, widened that gap to a still-small 17 points after declining 0.2% to 3,373. The Nasdaq Composite, meanwhile, eked out a modest 0.3% gain to 11,042.
Stocks Face Pressure From Several Fronts
The longer the stimulus stalemate continues, the more difficult it could be to cement a true new bull market.
"While the relay recovery has gone well so far – economic data is improving, and consumer spending has been supported by stimulus measures – pressure on personal incomes may increase toward the end of the year as governments begin to weigh the provision of additional stimulus funding more carefully," Richard Lacaille, State Street Global Advisors Global Chief Investment Officer, says in a recent note.
That's not all. "The U.S. election poses another risk – not just in terms of the election outcome, but also the prospect of a disputed election and potential Constitutional crisis," he says. Naturally, COVID itself also remains a risk until a vaccine is approved and can be fully distributed.
If that has you feeling on edge, there's no shortage of defensive options to shore up your portfolio.
These 12 bond mutual funds and ETFs could do some more lifting if the equity markets quiver; these seven low-cost gold funds likely would continue their torrid 2020, too.
Even if the market does continue to advance, it would be in the face of a still-weakened economy; the best stocks for such a new bull market, then, will need a special blend of business positioning and robust financials.
But JPMorgan also sees opportunity in some of the market's less sprawling names. Many mid-cap stocks – often referred to as "Goldilocks" plays for their ideal blend of potential and scale – have been sold off too enthusiastically and appear poised for a rebound. These five stand out the most, however, because the broader Wall Street community is just as enthusiastic about them as JPM's analysts.
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