Andy Wang says the massive liquidity and government stimulus measures can drive the market higher in the third quarter. But he tells Reuters' Fred Katayama the markets could also encounter some choppiness in the upcoming earnings season.

Highlights include:

  • Low inflation and tons of liquidity will allow the economy to slowly recover but with a greater disparity between winning and losing sectors.
  • Technology has performed strongly year-to-date with the Nasdaq up +14%. The Russell 2000 (small cap) is down -15% in the same period.
  • 5 big stocks – Apple, MSFT, AMZN, GOOG, FB make up 44% of technology index Nasdaq 100 and 21.6% of S&P 500 index.
  • S&P 500 earnings forecasts currently assume a V-shaped recovery
  • ADP  jobs report showed private sector rehired 2.4mm workers in June, many in the service sector.
    • Revised from 2.8 million job losses to gain of 3.1 million in May.
    • As economy reopens, workers are being rehired.
    • Many businesses still not operating at full capacity so continued weakness is likely.

What are your thoughts on the resilience of the stock market and risks ahead?

By Andrew Wang