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Is the stock rally ready to pause? Gains are looking wobbly as we wait for jobs data, and the European Central Bank, which is expected to add to the boatloads of pandemic stimulus credited for shielding stocks and investors from bad news.
The S&P 500 SPX, +1.36% is now up 40% from its March 23 lows, and some are nervous. It might pay to think longer-term right now.
Our call of the day, from Brad Neuman, investment strategist at equities manager Alger, is banking on 50-year technological revolutions, noting we’ve just finished one that has ended with smartphones and information in the palm of your hand.
“We think that we’re in a new long-term technological revolution, which we call the age of connected intelligence…and that means we think that there’s gong to be a lot of connected devices,” Neuman tells MarketWatch. Think the “Internet of Things” and lots more data being produced and processed in the cloud, and more access to that data for everyone at an affordable price.
“Ultimately, all of that data being analyzed by these very advanced hardware and software systems manifests itself in artificial intelligence and better decision making,” he says.
How to play it? Via semiconductors and equipment makers, such as LAM Research LRCX, +5.68%, which help process data, or cloud-platform companies such as Amazon AMZN, +0.24% and Microsoft MSFT, +0.24% that provide hardware and software to analyze the data and eventually will provide artificial intelligence as a service.
Payments is also a key theme within connected intelligence, which means owning Visa V, +0.26% and PayPal PYPL, -0.45%. And health care is also a “good microcosm” on the theme of analyzing big data and putting it to good use, says Neuman. So the Alger team owns companies that provide material and equipment to do that, such as Thermo Fisher TMO, -0.82% or Bio-Techne TECH, -1.67%. Finally, you can buy the cloud-based software companies to help develop and market drugs — such as Veeva Systems VEEV, -1.99%, he says.
So why a strategy like this right now? “One of our core beliefs at Alger is that innovation can transcend economic volatility. In any period over the past 150 years…there’s always an area of innovation that’s thriving and companies that are growing because of it,” said Neuman.
Opinion: If the time is right for value stocks, this diversified dividend ETF may fit the bill
The market
Dow YM00, -0.53%, S&P ES00, -0.57% and Nasdaq NQ00, -0.29% futures are down. European stocks SXXP, -0.61% have been on a tear, but not on Thursday, as that European Central Bank meeting looms. Asian markets had a mostly positive day.
The chart
Speaking of central bank spending, here’s a 300-year look at what’s been happening at the Bank of England:
The buzz
Ahead of Friday’s payroll’s data, weekly jobless claims are expected to slow to 1.8 million, but continuing claims may provide better clues of an economy on the mend. Trade deficit and revised productivity data is also en route.
Workplace chat app Slack WORK, +3.96% will report after the close, along with technology group Broadcom AVGO, +3.84%.
And online meeting group ZoomInfo ZI, has priced its initial public offering at $21, topping an already hiked range.
All four police officers involved in the death of civilian George Floyd are facing new charges. That is as a rainy night in New York and early curfew kept protests calm on Wednesday evening. Former Defense Secretary James Mattis unloaded on President Donald Trump over his threat to bring in the military to stop protesters, saying “he tries to divide us.”
On the coronavirus battlefront — 10 million people were tested in Wuhan and just 300 infections were found, and scientists studying the disease say it isn’t mutating into a bigger threat.
Random reads
There is a new suspect in the 2007 disappearance of U.K. child Madeline McCann.
New York Times staffers are in revolt over a hawkish opinion piece about the police protests.
Spanish pornography star arrested over man’s toad-venom death.
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