Red-Hot Stock Rally Powered by Companies With Shaky Finances
- Shares of companies with weak balance sheets are outperforming
- Leverage ‘pays off’ during economic rebounds: Mellon’s Porter
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The coronavirus is raging again. Whole states are at risk of closure, November payroll growth was anemic and solvency risk is bubbling back up. That stocks could rally amid such a backdrop should probably, by now, surprise nobody. That it’s happening on the back of firms with the worst balance sheets might.
Companies with shakier finances rallied 4.3% over the past five days, beating their sturdier counterparts for a fourth week, the longest streak in 13 months, data compiled by Goldman Sachs Group Inc. and Bloomberg show. Up 25% since the start of October, the weak-credit group is poised for its best quarter of relative performance since the last bull market began in 2009.