By Philip van Doorn, MarketWatch
The second quarter was a dramatic one for U.S. stocks — the S&P 500 had its best quarter since 1998.
But many of the best performers were really bounce backs from the doldrums of March, when the market hit bottom during the start of the coronavirus pandemic.
Some stocks are still down for 2020, but there were also some “real” winners — ones that were up significantly in the quarter and the first half of the year.
Below are lists of stocks that rose the most during the second quarter.
• The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.29% climbed 17.8% in the second quarter, but was down 9.6% for the first half of 2020. (All gains and losses in this article exclude dividends.)
• The S&P 500 /zigman2/quotes/210599714/realtime SPX +1.22% added 20% in the second quarter, and ended Tuesday down 4% for 2020.
• The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.72% soared 30.6% during the second quarter and is now up 12.1% for 2020.
There are still hundreds of large-cap U.S. stocks with double-digit declines for the year. To lift the sagging economy, the Federal Reserve is supporting the market with extremely low interest rates and a vast increase in the money supply through securities purchases. In addition, the federal government is giving unprecedented aid to people and businesses affected by the coronavirus pandemic.
Rising forward valuations
Here’s chart showing the S&P 500 trading at its highest forward price-to-earnings valuation since February 2001:
The S&P 500 traded for 21.6 times weighted consensus forward earnings estimates at the close June 30, up from a forward P/E valuation of 18.3 at the end of 2019.
That forward P/E ratio is up, even thought the S&P 500 is down this year, because analysts have cut their earnings estimates following the economic devastation caused by the Covid-19 outbreak. So there are myriad warnings of an asset bubble.
James Bullard, the president of the Federal Reserve Bank of St. Louis, said last week that he didn’t see evidence of an asset bubble. Charles Evans, the president of the Federal Reserve Bank of Chicago, said the economy might need even further stimulus, and that U.S. interest rates may head into negative territory.