By Barbara Kollmeyer, MarketWatch
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The European Central Bank has just added to the boatloads of pandemic stimulus out there, credited for shielding stocks and investors from bad news. But stock futures are under pressure, which could threaten yet another winning session for the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.40% .
The index is up 40% from its March 23 lows, and some are nervous. It might be time to hold onto that long-term investing plan with both hands.
Our call of the day , from Brad Neuman, investment strategist at equities manager Alger, is banking on 50-year technological revolutions, noting we’ve just finished one that has ended with smartphones and information in the palm of your hand.
“We think that we’re in a new long-term technological revolution, which we call the age of connected intelligence…and that means we think that there’s going to be a lot of connected devices,” Neuman tells MarketWatch. Think the “Internet of Things” and lots more data being produced and processed in the cloud, and more access to that data for everyone at an affordable price.
“Ultimately, all of that data being analyzed by these very advanced hardware and software systems manifests itself in artificial intelligence and better decision making,” he says.
How to play it? Via semiconductors and equipment makers, such as LAM Research /zigman2/quotes/208077897/composite LRCX +3.39% , which help process data, or cloud-platform companies such as Amazon /zigman2/quotes/210331248/composite AMZN +2.65% and Microsoft /zigman2/quotes/207732364/composite MSFT +2.86% that provide hardware and software to analyze the data and eventually will provide artificial intelligence as a service.
Payments is also a key theme within connected intelligence, which means owning Visa /zigman2/quotes/203660239/composite V +0.49% and PayPal /zigman2/quotes/208054269/composite PYPL +1.21% . And health care is also a “good microcosm” on the theme of analyzing big data and putting it to good use, says Neuman. So the Alger team owns companies that provide material and equipment to do that, such as Thermo Fisher /zigman2/quotes/201150432/composite TMO +2.19% or Bio-Techne /zigman2/quotes/203973516/composite TECH +0.61% . Finally, you can buy the cloud-based software companies to help develop and market drugs — such as Veeva Systems /zigman2/quotes/202850210/composite VEEV +1.71% , he says.
Veeva is in the Alger Small Cap Growth Z fund /zigman2/quotes/208657553/realtime ASCZX +1.51% .
So why a strategy like this right now? “One of our core beliefs at Alger is that innovation can transcend economic volatility. In any period over the past 150 years…there’s always an area of innovation that’s thriving and companies that are growing because of it,” said Neuman.
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The economy
The ECB has expanded its pandemic emergency asset purchase program by €600 billion rather than the €500 billion expected. It will also reinvest the proceeds of maturing securities and stretch out the expiration date of the program.
Ahead of Friday’s payroll’s data, weekly jobless claims came in slightly above expectations, with improvement less than expected, and continuing claims rose to 21.6 million. U.S. productivity was revised to a negative 0.9% for the first quarter from negative 2.5%, while the trade deficit widened to $49.4 billion in April.
The market
The Dow /zigman2/quotes/210598065/realtime DJIA +1.05% , S&P /zigman2/quotes/210599714/realtime SPX +1.40% and Nasdaq /zigman2/quotes/210598365/realtime COMP +2.13% are in the red after jobs data. European stocks /zigman2/quotes/210599654/delayed XX:SXXP +1.11% have been on a tear, and were up post-ECB, but are now off again. A press conference with ECB President Christine Lagarde is underway. Asian markets had a mostly positive day.
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