Thematic stock groups are coming back as investors breathe a sigh of relief after the election.
Groups like sports betting, cannabis stocks and 5G networking are jumping on positive incremental news. This could be bullish for the broader market because it shows investors are looking past big, macro risk like coronavirus or elections. Small unique groups like these tend to outperform during periods of greater risk appetite and lower volatility.
- Cannabis stocks are benefiting from marijuana legalization initiatives in states like New Jersey and Arizona.
- 5G networking stocks are benefiting after Qualcomm (QCOM), Skyworks Solutions (SWKS) and II-VI (IIVI) reported strong numbers. They all cited 5G demand.
- Sports betting benefited after ballot initiatives in states including Louisiana and South Dakota.
Two other potential themes could be worth watching:
- “ESG” stocks including solar had big rallies before the election. They initially pulled back but are now bouncing.
- China: The iShares China Large Cap ETF (FXI) has broken out to new highs while the S&P 500 and Nasdaq-100 remain below last month’s peaks. This is partially fueled by gains in the Chinese yuan.
Keep reading Market Insights for more on these themes into yearend.