Wall Street’s more than five-month-long bull run suffered a setback in September. Month to date, all the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are down 3%, 4.2% and 5.6%, respectively.
Wall Street is expected to continue fluctuating in the near future primarily due to a spike in new coronavirus cases in several countries in Europe and some states in the United States, lack of vaccine or a line of treatment for COVID-19, uncertainty regarding a fresh round of fiscal stimulus from the U.S. government, intensifying geo-political conflict between the United States and China, and the U.S. presidential election scheduled on Nov 3.
Nevertheless, a handful of momentum stocks with a favorable Zacks Rank are flying high after withstanding the September meltdown. These stocks have solid growth potential too. Investment in these stocks is likely to be fruitful in October.
Momentum Investing to the Rescue Amid the Meltdown
Momentum investing calls for a continued appraisal of stocks, ensuring that an investor does not pick a beaten-down name or overlook a thriving one. Momentum investors buy high on the anticipation that a stock will only ascend in the short-to-intermediate term.
In the current scenario, the market’s worst appears to be behind us as negative estimates are already factored in valuations. Several economists have pointed out that the pace at which the U.S. economy recovered during the May to July period dwindled in August. Slow growth in job data, retail sales data and durable goods orders are all examples.
However, the vital point here is that the economy is still growing, albeit at a slow pace, despite the lack of the second tranche of fiscal stimulus amid continued coronavirus-led woes.
On Sep 16, in his lecture after the conclusion of the two-day FOMC meeting,