Dow Plunged 1,000 Points This Week After Reddit Traders Stormed The Stock Market–What Happens Next?

Despite blowout corporate earnings and more solid news on the vaccine front, the stock market just posted its worst weekly performance in three months after Reddit traders squeezed Wall Street’s elite out of billions of dollars, sending prices of heavily shorted stocks up to atmospheric new highs and fueling concerns over market frothiness–but experts seem in broad agreement that the bull market can rage on. 

Key Facts

Investor sentiment took a massive hit over the “relentless option buying by retail investors taking advantage of a structural weakness in market,” Oanda Senior Market Analyst Edward Moya said Friday, noting that the Dow’s 1,000-point plunge this week was the index’s worst weekly loss since election uncertainty tanked sentiment in late October. 

“The market is not broken, but recent events have revealed some cracks,” says Commonwealth Financial Network Chief Investment Officer Brad McMillan, who thinks one likely result of the week’s frenzy could be that the price of options–which helped fuel some of the outsized meme-stock demand–rise to help curb “price hacking” in the future.

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McMillan eschews concerns from other experts that the Reddit-fueled price mania could be a sign the market is in the middle of a bubble akin to the dot-com era in the late 1990s, but he says “crackdown” by regulators is likely.

The big question surrounding the week’s short squeeze remains around how regulators–and prosecutors–will respond to the volatility, with lawmakers urging the SEC to act quickly on investigations into potential market manipulation by retail traders, brokerages and hedge funds alike. 

Like McMillan, LPL Financial Chief Market Strategist Ryan Detrick is also adamant that the week’s events are not indicative of a market bubble or impending correction, though he concedes recent events point to “excessive optimism in certain segments of the equity markets,” particularly in big-cap names losing capital from institutions covering shorts at sizable losses.

“Don’t forget, overall market breadth is extremely healthy, and the credit markets are functioning just fine—we don’t see a repeat of 1999 like some are claiming,” says Detrick.

Crucial Quote 

“The damage this week is real, but it is also part of the game: Hedge funds and banks routinely make mistakes and suffer for it, and traders losing money is not a sign that the system is broken,” says McMillan. “Another source of worry is that somehow markets have become less reliable because of the price surges–perhaps so, but the dot-com boom didn’t destroy the capital markets, and the distortions were much greater then than now.”

Surprising Fact

Meme stocks GameStop and AMC skyrocketed 400% and 275%, respectively, this week, while the Dow, S&P 500 and tech-heavy Nasdaq all fell about 3%.

What We Don’t Know

How long the retail trading frenzy may continue. Meme stocks largely surged Friday, and Erlam says “a solution for this entire market dislocation will take time, which suggests this insane trading will continue a little while longer.”

Key Background

The bull market rallied to new highs earlier this month in light of fiscal stimulus expectations, vaccine optimism and corporate earnings that keep surpassing expectations. Democrats this week have indicated they’ll move forward with stimulus even if they can’t muster up much Republican support, and–though disappointing–Johnson & Johnson’s vaccine candidate results mean another vaccine could reach the market soon, notes Vital Knowledge Media Founder Adam Crisafulli. Meanwhile, big firms like Apple, Microsoft and Tesla all smashed earnings expectations this week.

 

What To Watch For

Sen. Elizabeth Warren (D-Mass.) has asked the SEC to respond to a list of questions about its GameStop response by February 5. That includes details over whether Reddit traders, hedge funds and brokerages may have influenced the market. With regards to the Reddit crowd, veteran trader Richard Smith, who heads up the Foundation for the Study of Cycles, said Thursday they could “absolutely” be vulnerable to regulatory scrutiny from a pump-and-dump standpoint, but he says it could be years before the mechanisms behind their market influence are leveled. McMillan, meanwhile, says he sees evidence of the “pump,” but doesn’t believe they’re looking to sell anytime soon.

Further Reading

‘Bubble Fueled By Cynicism’: Meme Stocks Surge Again As Reddit Traders Pile Back In—But Dow Falls 300 Points (Forbes)

The Hedge Fund Genius Who Started GameStop’s 4,800% Rally Now Calls It “Unnatural, Insane, And Dangerous” (Forbes)

Robinhood Raises $1 Billion In Emergency Funds As Platform Struggles With Reddit-Fuelled Trading Surge (Forbes)

Not Just GameStop: Here Are The Meme Stocks WallStreetBets Traders Are Pumping Up During This ‘Extremely Erratic’ Reddit Rally (Forbes)

Warren Demands SEC Response To GameStop Frenzy After It Vows To Protect Retail Traders From ‘Abusive Or Manipulative’ Activity (Forbes) Follow me on Twitter. Send me a secure tip

Jonathan Ponciano

Jonathan Ponciano

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

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Business News 2.8K subscribers Despite blowout corporate earnings and more solid news on the vaccine front, the stock market just posted its worst weekly performance in three months after Reddit traders squeezed Wall Street’s elite out of billions of dollars, sending prices of heavily shorted stocks up to atmospheric new highs and fueling concerns over market frothiness–but experts seem in broad agreement that the bull market can rage on.”The damage this week is real, but it is also part of the game: Hedge funds and banks routinely make mistakes and suffer for it, and traders losing money is not a sign that the system is broken,” says McMillan. “Another source of worry is that somehow markets have become less reliable because of the price surges–perhaps so, but the dot-com boom didn’t destroy the capital markets, and the distortions were much greater then than now.”

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Top Dividend Stocks for January 2021

Dividend stocks are companies that pay out a portion of their earnings to a class of shareholders on a regular basis. These companies usually are well established, with stable earnings and a long track record of distributing some of those earnings back to shareholders. These distributions are known as dividends, and may be paid out in the form of cash or as additional stock. Most dividends are paid out on a quarterly basis, but some are paid out monthly, annually, or even once in the form of a special dividend. While dividend stocks are known for the regularity of their dividend payments, in difficult economic times even those dividends may be cut in order to preserve cash.

One useful measure for investors to gauge the sustainability of a company’s dividend payments is the dividend payout ratio. The ratio is a measure of total dividends divided by net income, which tells investors how much of the company’s net income is being returned to shareholders in the form of dividends versus how much the company is retaining to invest in further growth. If the ratio exceeds 100% or is negative (meaning net income is negative), this indicates the company may be borrowing to pay dividends. In these two cases, the dividends are at a relatively greater risk of being cut.

Below, we look at the top 5 dividend stocks in the Russell 1000 by forward dividend yield, excluding companies with payout ratios that are either negative or in excess of 100%. Each of the dividend stocks listed below significantly underperformed the Russell 1000’s total return over the past 12 months of 19.7%, as of December 21, 2020.1 All data below is as of December 22, 2020.

Lumen Technologies Inc. (LUMN)

  • Forward Dividend Yield: 10.08%
  • Payout Ratio: 86.56%
  • Price: $9.92
  • Market Cap: $10.9 billion
  • 1-Year Total Return: -17.7%1

Lumen Technologies, formerly known as CenturyLink, is an integrated communications company that offers services including local and long-distance voice, broadband, Ethernet, colocation, hosting, data integration, video, network, information technology, and more.

Brookfield Property REIT Inc. (BPYU)

  • Forward Dividend Yield: 8.86%
  • Payout Ratio: 63.63%
  • Price: $15.01
  • Market Cap: $587.3 million
  • 1-Year Total Return: -10.0%1

Brookfield Property is a real estate investment trust (REIT) that owns, develops, builds, manages, and leases various commercial properties. Among the company’s portfolio of properties are restaurants, malls, entertainment facilities, and parking areas. On November 6, the board of directors declared a quarterly dividend of $0.3325 per share on its Class A Stock payable on December 31, 2020, and a quarterly dividend on the 6.375% Series A Cumulative Redeemable Preferred Stock of $0.39844 per share payable on January 1, 2021.2

New York Community Bancorp Inc. (NYCB)

  • Forward Dividend Yield: 6.65%
  • Payout Ratio: 82.59%
  • Price: $10.22
  • Market Cap: $4.7 billion
  • 1-Year Total Return: -8.3%1

New York Community Bancorp is a holding company with multiple banking subsidiaries, including Queens County Savings Bank, Roosevelt Savings Bank, Atlantic Bank, and others. Through these subsidiaries, New York Community Bancorp offers a full range of banking products and services to businesses and consumers. The company primarily serves customers in the New York City metropolitan area.

Brandywine Realty Trust (BDN)

  • Forward Dividend Yield: 6.50%
  • Payout Ratio: 43.84%
  • Price: $11.69
  • Market Cap: $2.0 billion
  • 1-Year Total Return: -20.2%1

Brandywine Realty Trust is a REIT that owns, manages, leases, acquires, and develops urban, downtown, and suburban office properties primarily on the East Coast and in Texas. Its services include asset management, development and construction, investment, marketing and leasing, and property management. On December 8, the board declared a quarterly cash dividend of $0.19 per common share and OP Unit payable on January 20, 2021. The quarterly dividend is equivalent to an annual rate of $0.76 per share.3 

TFS Financial Corp. (TFSL)

  • Forward Dividend Yield: 6.41%
  • Payout Ratio: 66.57%
  • Price: $17.47
  • Market Cap: $4.9 billion
  • 1-Year Total Return: -6.8%1

TFS Financial is a holding company engaged in retail consumer banking, mortgage lending, and similar services through its subsidiaries. The company’s businesses include originating and servicing residential real estate mortgage loans and attracting retail deposits. Its main business is retail consumer banking.

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors.

Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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Top 10 Dividend Stocks – January 2021! In this video I show the top 10 stocks in January of 2021 that the thousands of dividend investors on my discord server (https://discord.gg/kkSr5FY) had the opportunity to vote for that they were buying or planning to buy. Then I’ll end this video with a powerful life story that is worth hearing and reflecting on, so I recommend you watch this entire video. Referral Link to M1 ➜ https://m1.finance/AUzJllYh-gGh To get access to my Spreadsheet 2.0 then please sign up as a Patreon Aristocrat or King (and double check my Patreon site to ensure I’m still offering access, as I only have limited seats available). You also get other perks for signing up including the ability to watch my videos on my Discord before I release them to the public, and the ability to vote on what thumbnail I’ll use in some of my future videos, and you gain direct access to me.

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How Determining the Dividend Rate Pays off for Investors The dividend is the percentage of a security’s price paid out as dividend income to investors. more

Special Dividend A special dividend is a non-recurring distribution of company assets, usually in the form of cash, to shareholders. more

Dividend Yield Definition The dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. more

Dividend Payout Ratio Definition The dividend payout ratio is the measure of dividends paid out to shareholders relative to the company’s net income. more

Dividend Clientele Dividend clientele refers to a group of shareholders that have a common preference for a company’s dividend policy. more

Dividend Definition A dividend is the distribution of some of a company’s earnings to a class of its shareholders, as determined by the company’s board of directors. more

6 Stocks Set To Soar In 2021

It’s crystal ball time. Technology and environmental stocks have been the big winners of 2020, but which stocks will skyrocket next year? The enforced digitisation of the world during the pandemic drove the likes of Amazon, Apple, Google and Netflix to new highs, while making household names of companies such as Zoom.

Coronavirus vaccine breakthroughs in November sparked a much-vaunted rotation in market leadership from the “stay at home” play to “the reopening trade”. Many believe this has much further to run, with the potential for missteps along the way around mass vaccination delivery or central bank policy.  

Here are six stocks analysts are backing to shine in the New Year.

Cineworld

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The cinema chain, which has screens across the U.S. and U.K., has been an archetypal business victim of the pandemic. Worst still, it went into the pandemic with $8 billion of net debt, following two highly leveraged acquisitions in recent years. Investors took flight, with the stock collapsing by just over 90% as lockdown was announced.

It has rallied by 122% since November, driven by the vaccine news, plus a fundraising and new $450m debt facility. MORE FOR YOUWhy Huawei’s New Update Is Seriously Bad News For Android UsersWhatsApp Users Suddenly Get This Surprise New Boost From FacebookHuawei’s Striking New Billion-Dollar Gamble Targets Apple, Google (And Tesla)

Neil Wilson, chief market analyst at Markets.com, is backing Cineworld as a higher risk reopening trade. “This new debt facility should act as a bridge to get to a point where it can reopen screens in the U.K. and the U.S. and get the cash flow moving in the right direction again,” he said.

Assuming it can reopen its screens fully in May, it has sufficient cash to cover “2021 and beyond”. However, “if there is a stock trading on this vaccine roll-out it’s Cineworld”, he cautioned. 

Tekmar 

Tekmar operates in power and telecommunications infrastructure, delivering systems that protect cables under the sea. It’s a niche area, but fast-growing, with offshore wind projects a big customer.

AJ Bell investment director Russ Mould describes the U.K. micro-cap stock as high risk, given its size, but believes it can deliver for patient, longer-term investors.

Tekmar’s shares have sold off sharply in 2020, down 61.9%, in part down to contract delays that can punish small businesses disproportionately.

But Mould points to the company having net cash of £36 million -against a net asset value of £46 million- cost-cutting, and a new product launch due in 2021.

“Meanwhile, the company’s leading position in the niche of protection systems for subsea cables and pipes offers plenty of scope for upside. There are surely few markets as packed with potential as this one, as the UK prepares to launch its green industrial revolution and throw money at wind power, an area where Tekmar’s skills are likely to be in high demand,” he said.

Vulcan Materials

American building supplier Vulcan Materials has lagged the bounceback in U.S. equities, still trading down 3.8% for the year. Some analysts have highlighted the company’s hefty debt burden, at around three times earnings before interest, depreciation and tax as a red flag to investors.

However, Steve Clayton, head of equity funds at Hargreaves Lansdown, believes Vulcan is solidly positioned to prosper from the expected further financial stimulus under president-elect Joe Biden.

“Vulcan sells building aggregates like gravel and because these are expensive to transport, Vulcan benefit from local monopolies and oligopolies, giving them reliable pricing power in what should be increasingly active markets,”

With the requirement for extensive new housebuilding and infrastructure development in the U.S., he rates the stock a good play for more balanced investors.

IAG

British Airways owner IAG is a classic reopening trade. Its stock was pummelled earlier in the year as flight routes, down just over 74% at their worst in August. Since the November vaccine breakthroughs, IAG’s stock has surged by 80%, but remains 38.5% below where it started the year. 

Wilson said that while the recent rebound has effectively priced in flight routes reopening in 2021, “there could be further upside driven by on the ground improvements to travel”.

“In addition to the roll-out of vaccines, efforts by airlines like BA and airports like Heathrow to find creative solutions to ending quarantine requirements for travellers such as digital health passes will progress and make it easier for travel to take place,” he said. 

Wilson added that he does not expect the airline conglomerate’s shares to return to their pre-pandemic levels next year, as “passenger travel levels are not seen returning to 2019 numbers for some years”. 

“But a steady reopening of the economy and pent-up demand among holidaymakers to get out and travel ought to support earnings recovery in 2021,” he added, making it a good pick for balanced investors.  

Haemonetics

Braintree, Massachusetts-based Haemonetics is a global operator in blood and plasma services and supplies. Clayton said it is a fast-growing field and one in which the company has built a significant presence, operating in 16 different countries.

Haemonetics’ shares have had a relatively pedestrian year, near-halving in the savage March sell-off before going on to claw back two-thirds of those losses. They remain 16.6% down for the year but have likely been overlooked by many investors who were focusing on biotech this year.

Clayton believes the firm is well-positioned to benefit from advances in blood plasma therapies, with the stock a buy for balanced investors.

“Haemonetics leads the world in blood plasma technology and has a new generation of products that should boost profits at the same time as saving customers money,” he said.

“Looking ahead, there are over 750 new therapies that use plasma undergoing trials. As trials turn to product launches, demand looks set to grow for years to come.”

SSE

The U.K. power company, formerly known as Scottish & Southern Energy, is a good play for cautious investors, according to Mould. With stable revenue streams, it is paying a healthy 5.6% dividend with inflation-linked increases planned for the next two years.

But there could be a bit of a hidden growth story in the FTSE 100 stalwart too, he feels.

“SSE’s existing renewables portfolio and growth plans leave it well placed to be in the vanguard of the drive in the UK toward alternative sources of energy, a drive given fresh impetus by the government’s announcement in November of a multi-billion-pound green industrial revolution,” he said.

The value of SSE’s renewable assets was underlined earlier this year when the firm bagged a nice profit selling a stake in a wind project in Dogger Bank that SSE co-owns with Norway’s Equinor to Italian oil major ENI earlier this year.

“That seemed to confirm the clear upward trend in the market value of renewable assets and with oil majors potentially wading in at almost any price given their determination – and need – to reinvent themselves – SSE’s shares could yet offer greater potential for capital appreciation than many investors realise.”

James Phillipps

James Phillipps

I have been writing about wealth, the wealthy and investment for 20 years now. From how the rich amassed their fortunes to the investment strategies they employ to build and grow their assets, and what we can learn from them. But also what they spend it on, because all work and no play would be no fun. I was previously editor of Citywire Wealth Manager for eight years, where I saw first-hand both the good and bad of private client investment management. My goal is to help you identify opportunities while navigating the pitfalls. You can contact me at jamesp.freelance@gmail.com

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GenZ Investor

Top 6 Stocks To BUY For 2021! Best Stocks To BUY NOW! This year is almost over, so investors are looking for stocks they believe will climb higher in 2021. In this video, I go over 6 stocks that I chose from a larger list of companies all expected to grow next year. Get 2 FREE STOCKS On WeBull when you deposit $100 (Worth Up To $1400): https://act.webull.com/k/FegF9ThR1Vio… Subscribe For Daily Stock Videos: https://bit.ly/2ulEGxL Check Out These Other Investing Videos: -TOP Dividend Stocks From Each Sector: https://youtu.be/KnR1u56AYDE -HUGE Dividend Growth Stocks: https://youtu.be/9V8Epc1o62w -BEST DIVIDEND Stocks Under $50: https://youtu.be/f9sn5ABsU9U -VALUE Stocks To BUY NOW: https://youtu.be/XHptXf8yrtE -PASSIVE INCOME Stocks: https://youtu.be/gH7OjqpMAU8 Always do your own research and speak with a qualified professional before making any investment decisions! I am not a financial advisor and I am not making any investment recommendations. These videos are for entertainment purposes only!

Enterprise Software CEOs From The Cloud 100 Predict A Massive Upswing In 2021

A GGV Capital survey reveals 94% of private cloud companies expect improved revenue in 2021, while two-thirds do not expect the pandemic to impact their businesses beyond next year.

The Covid-19 pandemic has upended almost every facet of our lives; enterprise software companies, from startups to multibillion-dollar public companies, have not been immune to 2020’s headwinds. Yet this sector also benefited from the mass shift to work-from-home and accelerated digital adoption. For the last decade, companies have been transitioning their business processes, applications, and data to the cloud, and COVID-19 simply sped up this digital transformation.

As an investor in the software industry for over 20 years, I wanted to explore the impact of the pandemic on enterprise companies and what their CEOs predict will happen to their businesses in 2021. So I conducted an informal survey; I polled 25 CEOs of top software companies, from growth-stage to pre-IPO, listed in this year’s Forbes Cloud 100, and 17 responded. It’s hardly a scientific study, but the CEOs’ responses were illuminating, proving the pandemic has hurt many software companies’ 2020 top-lines but also provided unprecedented opportunities for growth.

Survey response showing the impact of Covid-19 on annual ARR for current forecast vs. pre-pandemic plan
ADAM SHARRATT AND STUDIO 96 PUBLISHING

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Nearly 90% of respondents say the COVID-19 pandemic negatively impacted their 2020 top-line results. Seven companies project their top-line annual ARR to come in up to 20% below their pre-COVID plan, while six project results that are 20-50% below their pre-COVID plans. Two companies actually project higher ARR than planned pre-COVID, proving some software business models flourished during work-from-home orders.

Not surprisingly, however, the overall top-line impact of the pandemic for this group was negative in the down 20% to down 50% range. Yet valuations for many private enterprise software companies surged during the pandemic; public market funds and venture investors alike clearly believe organizations will continue their digital transformations via cloud computing, AI, and open source.

Public Company Performance vs. Estimated Internal Pre-COVID Plan
ADAM SHARRATT AND STUDIO 96 PUBLISHING

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Interestingly, many public cloud companies also underperformed in 2020 compared to projected guidance, but they seemed to have weathered the pandemic better than private cloud companies. GGV took a look at published financial records for 36 public cloud companies, and, in aggregate, roughly two-thirds of these companies undershot our estimate of their internal, pre-COVID top-line plans for 2020, but they did so by a smaller margin than the 17 private companies I surveyed. Their median underperformance compared to plan was -2.9%.

The other one-third of the public companies we examined actually exceeded our estimates of their internal, pre-COVID top-line plans. Why did public cloud companies perform better than private ones in 2020? We don’t think public cloud companies are necessarily higher quality than private ones, but, more likely, they were not growing as fast as their private counterparts leading into COVID, so they didn’t have as high a hill to climb to maintain planned internal growth assumptions.

It has also been easier to sell new business into existing accounts than to find new accounts during the pandemic, giving public companies with a large installed base an advantage.

[Note: To identify the public companies’ internal pre-COVID growth plans for 2020, we took the simple average growth rate from the full-year 2020 public guidance these companies offered when reporting their Q4 ’19 results, just prior to the pandemic, and the full-year growth these companies sustained in 2019. Although not perfect, this seems a pretty good proxy for most public companies’ pre-COVID 2020 plans.]

Survey response on the level of optimism for the 2021 vs. 2020 business climate
ADAM SHARRATT AND STUDIO 96 PUBLISHING

Private cloud companies are already recovering and confident regarding the future. Almost all of the software CEOs we surveyed are more optimistic about 2021 than they are with the reality of 2020. Out of the 17 respondents, 16 believe their businesses will improve in 2021. Seven said their businesses would perform significantly better in 2021, and nine thought business would be mildly better next year. Additionally, while no one knows how the pandemic will play out, two-thirds of the CEOs surveyed believe the pandemic will not impact their businesses beyond 2021. 

Survey response showing the expected impact of the pandemic on business beyond 2021?
ADAM SHARRATT AND STUDIO 96 PUBLISHING

Many of the CEOs we surveyed believe that, with vaccines becoming widely available, the world will return to some semblance of normal in mid-2021. “I see a massive upswing in in-person experiences such as entertainment, travel, and social engagement beyond pre-COVID levels as people ‘make up for lost time’, and with that, I see corresponding success for tech platforms enabling these,” said one CEO.

“2021 will be the perfect storm for enterprise software—massive IT budget increases, paired with a distributed workforce,” said one CEO. Seeing strong demand for remote workforce technologies, security infrastructure, and data capture and analytics software, the CEOs were confident revenues would improve. “There will be a sustained momentum in digital transformation even as we move past COVID,” predicted one CEO, while another expects an “acceleration of technology that connects people and teams and that creates more business agility.” 

As demand for enterprise software booms in 2021, the CEOs believe a shakeout may come later in the year. “Competition between cloud providers will lead to lower margins, with each cloud trying to differentiate themselves with exclusive software,” said one CEO. Another commented that we should expect to see “much higher volatility between the winners and losers, and if the model is right, business will accelerate; if it is not, there will be no room for error and companies will collapse.”

I believe the enterprise software companies that will succeed post-pandemic will fall into three broad categories: those that serve developers with offerings that win their hearts and minds utilizing open source and API-driven models such as Hashicorp, Confluent, and Stripe; those enabling knowledge workers through low-code or no-code apps, such as SmartSheet and Notion; and those helping organizations extract value from massive quantities of data, including Snowflake, Databricks, and MongoDB.

Of course, these companies are already success stories, and many startups will emerge in an ecosystem around these winners in the next few years. With 2020 in the rearview mirror, I’m sure I speak for everyone in that I can’t wait to see what 2021 brings.

Follow me on Twitter or LinkedIn. Check out my website or some of my other work here

Glenn Solomon

Glenn Solomon

I am a Managing Partner at GGV Capital, a global venture capital firm focused on local founders. I invest in Enterprise Tech startups across seed to growth stages and across key areas including Open Source, cloud, infrastructure and cyber security sectors. I have been a VC for the the past 20+ years and in the last decade helped nine companies complete IPOs. I write about the trends and companies driving the next $1 trillion enterprise market and host the Founder Real Talk podcast, where I interview founders and startup executives about about the challenges they face and how they’ve grown from tough experiences.

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Amazing Stock

http://goo.gl/WPKt5w The world is divided in many different ways. We’re divided by invisible national boundaries, which carve up the land into different countries. We’re separated by seas and continents, which force us to live apart. Aside from that, we’re also separated by religion, and culture, and language. Because of all this, it’s sometimes hard to remember that we’re all one human race, and we all need to work together to deal with some of the issues that could change the face of the whole planet.

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Stocks Rally, Dow Rises 700 Points On News Of Gilead’s Possible Coronavirus Treatment

Despite dismal economic data earlier this week, the stock market jumped on Friday as investors became more optimistic about the coronavirus outlook, amid news overnight that Gilead Sciences’ Covid-19 treatment was showing signs of success in clinical trials with patients.

KEY FACTS

The Dow Jones Industrial Average was up 3%, nearly 700 points, while the S&P 500 gained 2.7% and the Nasdaq Composite rose 1.4%.

Stocks got a boost thanks to news overnight that biotech company Gilead Sciences has made a breakthrough in its clinical trial of antiviral drug Remdesivir, which showed promising results in treating coronavirus.

The phase 3 trial, conducted at the University of Chicago, found that most patients treated with the drug had “rapid recoveries in fever and respiratory symptoms,” according to the original report from STAT News.

Adding to Wall Street’s optimism about the virus outlook was a White House press conference on Thursday night, in which President Trump outlined his plans for getting the U.S. economy back up and running.

Trump said some states that met criteria for testing and a low number of new cases would be able to reopen “literally tomorrow,” though he made it clear that the onus remains on state governors, who would be calling their own shots on when to reopen.

The market also got a boost from the news that embattled airline carrier Boeing, which saw its stock plunge by as much as 75% during the coronavirus sell-off, would resume production in the Seattle area later this month.

Crucial statistics

Gilead’s stock jumped on the news Friday, rising almost 10%, while Boeing BA stock rebounded by more than 13%. Shares of several big-name stocks led the market higher this week, despite falling slightly on Friday: Amazon AMZN and Netflix NFLX both hit new record highs, up 14% and 16%, respectively, while shares of Walmart WMT rose nearly 9%.

KEY BACKGROUND

With Friday’s rally sending stocks higher, the S&P 500 notched its first back-to-back weekly gains since early February. The index rose over 2% this week, while the Nasdaq NDAQ gained over 5% and the Dow is up around 1%.

Crucial quotes

“Markets are responding to an outlook that is a far cry from the doomsday scenario projected in the latter days of March and early days of April,” says Peter Essele, head of portfolio management for Commonwealth Financial Network. “We’ve moved from depression to recession, with a glimmer of light at the end of the tunnel.”

“While there has never been any doubt that the U.S. economy would come back online at some point, these three events, taken together, raised optimism (although doesn’t guarantee) that the comeback will be sooner rather than later,” according to a note from Bespoke Investment Group.

What to watch for

“The true litmus test over the next month will be whether payroll cuts have spilled over into additional sectors of the economy beyond leisure and hospitality,” predicts Essele. “If that ends up being the case, it’s quite possible that markets will retest lows, as the economy will require more than a simple shot of adrenaline to put things back on course.”

Further reading

Here Are 29 ‘Get Out And Go’ Stocks For The End Of The Coronavirus Quarantine (Forbes)

Trump Says Some States Will Be Able To Open ‘Literally Tomorrow’ If They Want To (Forbes)

Stocks Fall, Dow Tumbles 400 Points After Retail Collapse And Weak Bank Earnings (Forbes)

This Week’s Economic Data Is Concerning: Here Are The Latest Reports Showing The Impact Of Coronavirus (Forbes)

Full coverage and live updates on the Coronavirus

Follow me on Twitter or LinkedIn. Send me a secure tip.

I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

Source: Stocks Rally, Dow Rises 700 Points On News Of Gilead’s Possible Coronavirus Treatment

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