Crude oil prices slumped to an 18-year low on Friday, but the stock market rallied again. The S&P 500 has now recovered 55.5% of the losses sustained in the Covid 19 sell-off. The S&P 500 will need to retrace two-thirds of the losses before sceptics are won round.
However, liberal support from the Fed and the US strength in technology, could yet see the S&P 500 recover all of the losses sustained since the market peak (February 19th). The US is well placed to offer (globally) the IT services that are currently in strong demand. IT has fallen 2.5% this year and has been the second best performing sector.
The rally in the IT index has been helped by a recovery in all three components: semi-conductors & semi-conductor equipment, technology hardware & equipment, software & services (see first chart this page).
But the latter has seen a marked divergence between IT services (down 11.0%, year-to-date) and software (up 9.7%). Two obvious winners from the shift to remote working include Akamai Technology (+23.5%, cloud computing, and content delivery, website management) and Citrix Systems (+35.6%, software, cloud computing and remote working).
Summary
• A new way of working
• Obesity is a big issue for Covid 19
• But US has a global advantage in software
