US Nasdaq index recovers all of 2020's losses triggered by Covid-19
The technology-heavy Nasdaq index turned positive for 2020 on Thursday, boosted by gains in the share prices of companies such as Amazon, Microsoft and Netflix, which have fared well during the Covid-19 lockdown.
The US index caught up all this year’s losses, taking it back to its level at the beginning of January, after rising 1.4% on Thursday to 8,979.66. It ended last year at 8,972.
The Nasdaq fell sharply as coronavirus spread around the world, but it has now shrugged off that setback. Marios Hadjikyriacos, an analyst at the currency firm XM, said investors were rushing into “giant tech names that are considered more resilient”.
The FAANGM stocks – Facebook, Amazon, Apple, Netflix, Alphabet (the parent company of Google) and Microsoft – were all up on Thursday. Nexflix is up 32% this year, Amazon is 25% ahead and Microsoft has gained 14%, while Apple has gained 1%, Facebook is up 1% and Alphabet is 0.1% ahead.
It is the first time one of the world’s major stock markets has turned positive since the pandemic led to many countries going into some form of lockdown. Many people have been working from home, communicating via social media and shopping online, boosting demand for the products and services provided by the FAANGM companies. Amazon in particular has enjoyed a sales boom, with revenues up 26% to $75bn in the first quarter of 2020, equivalent to more than $33m an hour.
Joshua Mahony, a senior market analyst at the trading platform IG, said: “The nature of this current crisis has leaned heavily on to technological solutions to everyday activities, with the prospect of an increasingly digital marketplace and workplace ensuring optimism for those tech stocks within the Nasdaq index.”
But he said the tech out-performance was likely to change “when we see normality resume due to a vaccine, with traders jumping on those currently depressed sectors such as travel”.
The Dow Jones also rose on Thursday, up more than 400 points or 1.8% at one point, amid hopes that the US economy may reopen soon. The latest jobs data showed another 3 million Americans filed for unemployment benefits last week, taking the total to more than 33 million in the past seven weeks.
However, investors took comfort from the fact that the pace of layoffs in the world’s largest economy had slowed.