Stay-at-Home Stocks Send Markets Soaring Friday

The stock market has been looking for a strong recovery, and on Friday, it finally got one. Even though investors are still uncertain about what another potential round of federal government stimulus might look like or whether the COVID-19 crisis will continue, they nevertheless feel confident that the long-range prospects for the economy and the markets are sound. That helped lift the Dow Jones Industrial Average (^DJI -0.12%), S&P 500 (^GSPC -0.09%) and Nasdaq Composite (^IXIC -0.05%) considerably on Friday.

Today's stock market

Data source: Yahoo! Finance.

Earlier this year, investors seemed to have the idea that the key to a permanent recovery would be for things to return as much to normal as possible. As 2020 has progressed, though, many market participants are getting more comfortable with the idea that the pandemic might create some permanent changes. Some companies are already taking advantage of those changes, and if shareholders perceive that those companies won't have to give back their gains once a permanent solution to COVID-19 is in place, that could lead to further gains.

Image source: Getty Images.

Another boom for the stay-at-home sector

A look at some of today's biggest gainers on Wall Street shows just how much confidence investors have that some of the highest-quality companies in the stay-at-home trend could continue to thrive well into the future. Consider:

• Zoom Video Communications (ZM -0.52%) has been instrumental in keeping people connected during the pandemic. Even as employees start to return to work, millions of students are using Zoom as an integral part of their educational experience. Moreover, Zoom has become a backup plan for those who need a fail-safe if their return to in-person interaction runs into health problems. Zoom shares rose 7% Friday.
• Shopify (SHOP -2.74%) has played a critical role in helping businesses of all sizes create an online presence. For small businesses that had to shut down their brick-and-mortar retail presence entirely, Shopify has been a lifesaver. The Ottawa-based company continues to make things easier for struggling businesses. Shopify's stock was higher by 6%.
• Peloton Interactive (PTON -3.19%) saw its stock soar more than 10% Friday. The connected fitness king has fended off competitors thus far, and with gyms and fitness centers among the last businesses to reopen in many areas, the at-home exercise alternative has only grown more popular.
• Livongo Health (LVGO) and Teladoc Health (TDOC 0.15%) added 7% today. The diabetes self-monitoring specialist and the remote healthcare facilitator expect to merge with each other soon, creating an even more formidable company in the telehealth space. Hospitals and doctor offices have high risks for patients who don't absolutely need to be there, and remote alternatives are both safer and more efficient in many cases.

In addition, many of the cloud-computing companies that make all these remote technology and services options possible also did well Friday. Without the backbone of the internet and cloud computing to support them, the stocks above wouldn't be able to do everything they've accomplished so far.

Getting ready for what's next

Obviously, no one knows what the future will bring. Pharmaceutical and biotech companies are working at breakneck pace to find a vaccine for COVID-19. Winter is coming in the Northern Hemisphere, which could spur second waves of outbreaks both in the U.S. and across the globe. Already, infection rates are rising in the Midwest, as well as in European countries like France and Spain.

Investors have to stay on their toes, but they also should recognize that some companies will thrive regardless of the volatility of current events. A long-term view is essential to keep your cool.

Investing in the stock market  is always challenging, and today's difficulties make it all the more so. By identifying key trends that are likely to stay in place no matter what happens, you can get an edge that those who only invest in index funds and ETFs won't have.