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9.

Here's the 2023 Chart Setup for the S&P 500 and Nasdaq

2022-12-30 19:17:00 by TheStreet.com

Despite a brutal year, the trend is still not a friend for the bulls. Here's how the charts look going into 2023.

10.

Once 2023 Starts, Investors Have Work to Do

2022-12-30 14:59:02 by Mark Vickery from Zacks

Friday, December 30, 2022

We’ll close out the worst trading year of the last four years with a half-session today — markets close at 1pm ET. The way we started 2022, I’m sure we all remember seeing rather profound risks in front of us… but we were also near all-time highs, so they were relatively easy to look past. Well, we’re on the other side of that coin now, aren’t we?

That’s the good news for the new year, actually: plenty of valuations have been depleted, across sectors and including some truly great companies. We’ve finally managed to remove an unreasonable level of expectations from forward earnings. We may, in fact, even be headed for an earnings recession, though this is far from a consensus view just a couple weeks prior to Q4 earnings season.

Zacks Director of Research Sheraz Mian spoke a bit about what to expect this earnings session. He acknowledged that expected declining growth in back-to-back quarters might technically put us in an earnings recession, but he preferred to look at it this way: “Overall, a moderating earnings environment is the less-dramatic way to put it… Estimates have been coming down for a while now — April, to be precise. But if the economy can avoid a nasty recession, then the bulk of cuts could likely be behind us.”

A “steady as she goes” Q4 earnings season, and maybe glancing into a light recession for just a couple quarters, might be the optimistic way of looking at 2023, or at least the first half. And the Fed has already suggested that the longer it is underwhelmed by major economic reports, the more it plans to keep high interest rates (5.00-5.25%, 75 bps higher than we are today) for longer, meaning a prolonged period of slightly tighter monetary policy than we’re experiencing now.

If the coming economic reports in early 2023 bring some surprises, however — negative surprises — that’s a likelier way to see shifts in Fed policy, near term. These things are not set in stone, after all (remember when inflation was just “transitory”?). But with it would come pain in areas that have been comfortable for some time. Thinking of the jobs market. Next week brings us monthly ADP and nonfarm payroll reports.

Not only do we get private-sector payrolls (Thursday next holiday-shortened week, not the usual Wednesday) from ADP and the U.S. Bureau of Labor Statistics (BLS) Employment Situation on Friday, but next week brings us ISM and S&P PMI Manufacturing and Services, JOLTS and job quits, Fed minutes from the December meeting, Weekly Jobless Claims, Trade Deficit and Factory Orders. We’ll know a lot more about our economic situation a week from today than we do now.

Thus, with the last glasses of mulled wine sipped (and champagne on New Year’s — while we can still get champagne), we can put this cruel year of dashed hopes behind us. Zacks.com will observe New Year’s Day on Monday, January 2nd. We’ll see you here again Tuesday of next week. Happy New Year!

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11.

Pinduoduo biggest Nasdaq gainer in 2022, tech gets clobbered

2022-12-30 14:24:24 by Yahoo Finance Video

Yahoo Finance’s Jared Blikre breaks down Nasdaq 100's biggest stock performers in 2022.

12.

Stock market: Nasdaq on track for worst December on record

2022-12-29 14:53:12 by Yahoo Finance Video

Yahoo Finance Live’s Brian Sozzi breaks down the stat of the day.

13.

Dow Jones and S&P 500 rise, Nasdaq trades lower as investors eye Santa Claus rally

2022-12-23 16:36:16 by Yahoo Finance Video

Yahoo Finance's Jared Blikre breaks down the prospects of a Santa Claus rally this year and what that portends for stocks in 2023.

14.

PCE Stays Healthy, Durable Goods Drop

2022-12-23 15:13:03 by Mark Vickery from Zacks

Friday, December 23, 2022

Pre-market futures slipped into negative territory on the release of new economic data ahead of today’s opening bell — but then reversed course mere minutes later. November Personal Consumption Expenditures (PCE), oft-cited by voting Fed members, including Fed Chair Jay Powell, came in at +0.4% — a gain of 10 bps month over month. Stripping out volatile food and energy costs, the “core” read brings us +0.2%, down 10 bps from the upwardly revised +0.3% for October.

That’s income; spending gained +0.1% last month, though this is down big from October’s +0.9%. What this tells us — at a glance, anyway — is that holiday shopping this year was pulled forward to mid-fall; likely this was based on retailers not being caught with short supply like they were last year. It also tells us that at least some aspects of our long-suffering supply chain issues have been solved, at least for this year’s retail commerce.

The Deflator, month over month — a key indicator for the Fed in quantifying monetary policy — rose +0.1% for November. This is well off the hot June high +1.0%, indicating that, from yet another angle, inflation is cooling down. Year over year, the Deflator came in at expected at +5.5%, down 150 bps from June. Core deflator month over month was also in-line at +0.2%, down from April’s high +0.6%. More evidence things are progressing in the right direction, albeit slower than we’d prefer.

Preliminary (subject to revision) Durable Goods Orders for last month sank nearly twice as low as expected: -2.1% from the -1.1% consensus. This is the lowest monthly read since the Covid-ravaged April 2020 — not a good sign, unless we’re looking for bad news to be good news. Ex-defense, orders were down -2.6%, though ex-Transportation this figure moves up to +0.2%. Core capital orders, non-defense, ex-aircraft (a proxy for “normal” business expenditures) was also +0.2%, slightly higher than expected.

Shipments came in somewhat better than anticipated: -0.1% month over month, whereas -0.3% was expected — in any case, shrunken notably from October’s +1.4%. Again, consider holiday seasonality with these numbers; hotter retail spending (thus constituting greater need for shipments) for shopping season tends to distort these figures. We’ll see a “purer” print this time a month from now.

Pre-markets have been flipping and flopping all morning; apparently, this data isn’t bringing the masses of investors to any clear conclusions today. Perhaps that will change with the University of Michigan’s consumer sentiment survey for December due after the opening bell. We’ll also get 5-year inflation expectations from the same folks, as well as New Home Sales for November, widely expected to come in lower month over month.

Volumes ought to be rather low, if we go by history. It’s Christmas weekend, after all. Which reminds me: Ahead of Wall Street, and Zacks.com overall, will be off Monday in observance of the holiday. We will return Tuesday to close out the year, hopefully with that long-sought “Santa Claus Rally” (but who really knows?). Also, markets close early today: 1pm ET. Finally, Happy Holidays and Merry Christmas to everyone!

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15.

The 3 Biggest Opportunities for Stock Investors in 2023

2022-12-22 15:37:58 by Bret Kenwell from InvestorPlace

It’s been a tough year for investors, but the bear market hasn’t relented much just because we are approaching the end of 2022. That said, all this pain has investors looking for the biggest investing opportunities of next year.

Will it be better in 2023? In some ways, yes, as certain assets should enjoy more upside. However, there’s still likely more pain on the way in many asset classes.

Even when we look at just the stock market, some industries and sectors continue to do quite well, while others have been obliterated. Tech is in a job recession, and the stocks have been pummeled while defense and energy stocks continue to roar.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Considering all sectors and asset classes, one can see how the biggest investing opportunities may not be what they seem.

Biggest Investing Opportunities: Treasury Bonds

Several U.S. Treasury Bonds stacked on each other.

Source: larry1235 / Shutterstock.com

Taking a global view of the market is very difficult, and it’s not easy to navigate. There’s an infinite number of moving parts and considerations, so bear with me a bit.

In just ten days, we’ll likely get confirmation that the 10-year Treasury bond just had its worst year in more than a century. Since 1990, the worst one-year performance for the 10-year was an 8% loss in 1994. This year? It’s down more than 15%.

The iShares 20 Plus Year Treasury Bond ETF (NASDAQ:TLT) is setting up for the worst one-year performance in its history.

That has me thinking that the 10-year and other intermediate-term bonds can make a rebound next year. That’s particularly true when we are going into 2023 with a very hawkish Fed and now central bankers around the globe acting in a coordinated hawkish fashion in an effort to crush inflation.

While it will eventually work, it will likely put us in a recession, forcing buyers into Treasuries.

Biggest Investing Opportunities: The Invesco QQQ ETF (QQQ)

Source: Shutterstock

There are two caveats here with the Invesco QQQ Trust Series (NASDAQ:QQQ).

First, the safer alternative would likely be the SPDR S&P 500 ETF Trust (NYSEARCA:SPY). Second, the QQQ very well could make new lows in 2023 before the bottom is in.

My personal opinion — and it’s just that, an opinion — is that the market could bottom in the March/April time frame before turning higher.

With a hawkish Fed and a recession likely on the way, there’s no reason the market has a reason to avoid making new 52-week lows. It may have bottomed already, or it might mark the low in September 2023. No one knows — and I’m no exception.

However, the S&P 500 has rallied 80% of the time over the last 80 years. Until recently, the QQQ has been a monstrous outperformer vs. the SPY. Like bonds, these types of years are not common, and I expect us to get back on track in the next 12 months.

If that’s the case, I expect the QQQ to lead us out of those depths, and the reasoning is two-fold: First, the QQQ has a lot of exposure to mega-cap tech, which has some of the best financials in the world. Second, this year, tech was hit disproportionately hard, and the rebound can be stronger than some of the market’s counterparts.

Bonus point: The 60/40 portfolio is set for one of its ten worst performances since 1900. In 9 out of 10 of the prior scenarios, the 60/40 portfolio rebounded in the following year while averaging a double-digit gain. The only year it didn’t — in 1931 — was during the Great Depression.

Biggest Investing Opportunities: Profitable Growth Stocks

Hand of woman watering small plant in pot shaped like growing graph representing growth stocks

Source: Khakimullin Aleksandr / Shutterstock

Perhaps a little controversial, but it’s impossible for me to look away from growth stocks at this point. These are the names that create outsized, long-term gains when bought at the correct time. Buying on the way down has been a sucker’s game this year, as investors keep thinking these stocks won’t go lower.

Instead, I like the idea of looking at profitable growth stocks. The ones that have been beaten down are now getting cheap on a price-to-earnings basis. The others — those without positive free cash flow and earnings — are hard to lean on as they have no bottom-line support.

A small list in no particular order includes:

Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD), PayPal (NASDAQ:PYPL), DigitalOcean (NASDAQ:DOCN), Tesla (NASDAQ:TSLA) and The Trade Desk (NASDAQ:TTD).

That doesn’t mean all of these stocks are a buy right now or that they won’t make new lows. But they are names to keep an eye on in 2023 as potentially great long-term buys.

On the date of publication, Bret Kenwell held a long position in NVDA and PYPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

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The post The 3 Biggest Opportunities for Stock Investors in 2023 appeared first on InvestorPlace.

16.

U.S. tech stocks face major technical trial

2022-12-20 16:38:09 by Yahoo Finance Video

Yahoo Finance's Jared Blikre explains the technical ranges constraining the Nasdaq 100 and other indices.

17.

Stock ETFs Sink as Fed, Market at Odds Over Rate Hikes

2022-12-15 21:00:00 by Sumit Roy from ETF.com

The Federal Reserve is likely to push the economy into a recession if it doesn’t lay off its rate hikes—that’s one interpretation of market movements following the Federal Open Market Committee policy decision Wednesday.

While stocks gyrated in the immediate aftermath of the Fed’s decision to raise interest rates by 50 basis points, the SPDR S&P 500 ETF Trust (SPY) ultimately ended the session with only a modest 0.6% decline.

On Thursday, the market’s reaction was more emphatic—a 2.4% decline for SPY and a 3.4% drop for the Invesco QQQ Trust (QQQ).

While the Fed’s half-a-percent rate hike was widely anticipated, it was the central bank’s forecast for future rate hikes that was more aggressive than investors had hoped.

In the latest Summary of Economic Projections released Wednesday, the Fed officials forecast that their benchmark rate would reach a peak of 5.1% and stay there throughout 2023.

That’s higher than the 4.9% peak that markets are still pricing in, based on federal funds futures. The 20 basis point gap between the Fed and the market isn’t all that significant, but where the Fed and markets stand far apart is what happens after the peak in rates is reached.

The Fed expects it will leave rates at 5.1% throughout 2023, while the market is expecting at least two rate cuts.

The Tale of Two Landings

There are a few ways to interpret what’s going on here. One interpretation is that the market believes inflation is on the downswing—a view corroborated by this week’s reading on consumer prices for November.

If that’s the case, the Fed has no reason to leave interest rates so high, and it will happily start cutting rates later in 2023 as it becomes increasingly clear inflation isn’t a problem anymore. This is the soft landing scenario.

The other interpretation is more ominous. In this scenario, not only won’t inflation be an issue in 2023, the Fed’s rate hikes will push the economy into a recession, forcing the central bank to reverse course sometime next year.

In either case, it’s clear the market believes inflation won’t be a problem next year. It’s harder to ascertain what the market thinks about economic growth by just looking at its projections for the fed funds rate.

The market’s prediction for lower rates could be the result of a soft landing or a recession.

But if you combine what fed funds futures are telling us with signals from other markets as well as the latest economic data, you start to see worrying signs.

The 10-year Treasury yield dipped to 3.43% on Thursday, close to its lowest levels in three months and nearly 80 basis points below its highs of the year after the government reported that U.S. retail sales fell by 0.6% in November--the largest decline in a year.

The yield on the 10-year is now a whopping 167 basis points below the Fed’s projected peak for its federal funds rate.

It’s hard to imagine the 10-year yield trading so far below the federal funds rate if bond traders didn’t think a recession was a distinct possibility.

Then there’s the stock market, which tanked 2% Thursday. The S&P 500 is still a good 8.5% above its October lows, so you can’t read too much into this one-day move—but the stock market’s post-Fed-meeting downward trajectory fits into this idea that the Fed could overdo the rate hikes and push the economy into a recession.

For the past six months or so, the stock market has swung up and down based on the likelihood of a soft landing versus a hard landing. The S&P 500 is down about 18.5% from its highs—a notable decline but nothing that necessarily screams “hard landing.”

Still, investors collectively edged closer to the hard landing camp Thursday.

When it comes to the bigger picture, investors are still split in terms of whether a recession can be avoided or not.

Email Sumit Roy at sumit.roy@etf.com or follow him on Twitter @sumitroy2  

18.

Fed Funds Expected to Come In at 50bps; Import/Exports Report

2022-12-14 15:30:03 by Mark Vickery from Zacks

Wednesday, December 14, 2022

New Import Price Index results for the month of November are out ahead of the opening bell this Hump Day, with the headline down -0.6% versus the -0.5% expected and the downwardly revised -0.4% from the previous month. This brings import prices year over year to +2.7% — down notably from the +13.0% this index brought us in March of this year.

Exports for November was slightly back toward the zero-balance: -0.3%, from the previous month’s -0.4%. Year over year, exports are still up +6.3%, though well off the May and June 2022 prints of a whopping +18.6%. Just like in most other aspects of the domestic economy, we’re returning to a level of normalcy in both imports and exports.

The big news this morning, however, is wha we’ve been talking about all week: the conclusion of the latest two-day meeting of the Federal Open Market Committee (FOMC), upon which a new Fed funds interest rate will be announced at 1pm ET today. Baked into the cake already — and frosted yesterday with cooler-than-expected CPI numbers for last month — is a 50 basis-point (bps) rate hike. It will be the first time in 15 years the rate has been this high.

It will put the Fed funds rate in a range of 4.25-4.50%, up from 0.00-0.25% until the start of March this year. Current projections (from the SEP median Fed funds rate) for the end of 2023 are for a range of 4.50-4.75%. This would imply only one more 25 bps rate hike between now and a year from now, or perhaps a ramp-up higher and then the pivot beginning to wind down rates at some point earlier next year.

The FOMC statement today will be parsed carefully to see if there are any clues in the language whether this era of aggressive rate hikes is about to come to an end. A 50 bps hike is already a step in this direction, after 75 bps hikes for four successive meetings in a row. Currently, somewhere around the 5% range looks reasonable going forward: it would, over time, be expected to suck air from the inflation balloon without, one hopes, “breaking” anything in the economy and sending us into recession.

Even though there is a wide discrepancy of viewpoints on this interest rate debate, what most people seem to agree on is that what will happen can be expected to in the first half of 2023, not in the second half. Whether we fall into recession or the Fed is able to land the inflation plane safely, at this point we expect the second half of next year to be market participants taking action on the first half — if the news is good or if it isn’t.

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19.

Annual Changes to the Nasdaq-100 Index

2022-12-10 01:00:00 by Nasdaq, Inc. from GlobeNewswire

Nasdaq, Inc.

NEW YORK, Dec. 09, 2022 (GLOBE NEWSWIRE) -- Nasdaq (Nasdaq: NDAQ) today announced the results of the annual reconstitution of the Nasdaq-100 Index^® (Nasdaq: NDX), which will become effective prior to market open on Monday, December 19, 2022.

The following six companies will be added to the Index: CoStar Group, Inc. (Nasdaq: CSGP), Rivian Automotive, Inc. (Nasdaq: RIVN), Warner Bros. Discovery, Inc. (Nasdaq: WBD), GlobalFoundries Inc. (Nasdaq: GFS), Baker Hughes Company (Nasdaq: BKR), and Diamondback Energy, Inc. (Nasdaq: FANG).

The Nasdaq-100 Index is composed of the 100 largest non-financial companies listed on The Nasdaq Stock Market and dates to January 1985 when it was launched along with the Nasdaq Financial-100 Index, which is comprised of the 100 largest financial stocks on Nasdaq. These indexes act as benchmarks for financial products such as options, futures, and funds. The Nasdaq-100 is reconstituted each year in December, timed to coincide with the quadruple witch expiration Friday of the quarter.

The Nasdaq-100 Index is the basis of the Invesco QQQ Trust (Nasdaq: QQQ) which aims to provide investment results that, before expenses, correspond with the Nasdaq-100 Index performance. In addition, options, futures and structured products based on the Nasdaq-100 Index and the Invesco QQQ Trust trade on various exchanges.

As a result of the reconstitution, the following seven companies will be removed from the Index: VeriSign, Inc. (Nasdaq: VRSN), Skyworks Solutions, Inc. (Nasdaq: SWKS), Splunk Inc. (SPLK), Baidu, Inc. (Nasdaq: BIDU), Match Group, Inc. (Nasdaq: MTCH), DocuSign, Inc. (Nasdaq: DOCU), and NetEase, Inc. (Nasdaq: NTES).

Information

For information about the six companies to be added to the Nasdaq-100 Index, please visit the following respective company websites:

CoStar Group, Inc. – https://www.costargroup.com/

Rivian Automotive, Inc. – https://rivian.com/

Warner Bros. Discovery, Inc. – https://wbd.com/

GlobalFoundries Inc. – https://gf.com/

Baker Hughes Company – https://www.bakerhughes.com/

Diamondback Energy, Inc. – https://ir.diamondbackenergy.com/

About Nasdaq Global Indexes
Nasdaq Global Indexes has been creating innovative, market-leading, transparent indexes since 1971. Today, our index offering spans geographies and asset classes and includes diverse families such as the Dividend and Income (includes Dividend Achievers), Dorsey Wright, Fixed Income (includes BulletShares^®), Global Equity, Green Economy, Nordic, and Commodity indexes. We continuously offer new opportunities for financial product sponsors across a wide-spectrum of investable products and for asset managers to measure risk and performance. Nasdaq also provides exchange listing, custom index, and design solutions to financial organizations worldwide.

About Nasdaq
Nasdaq (Nasdaq: NDAQ) is a global technology company serving the capital markets and other industries. Our diverse offering of data, analytics, software, and services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions and career opportunities, visit us on LinkedIn, on Twitter @Nasdaq, or at www.nasdaq.com.

The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular financial product or an overall investment strategy. Neither The Nasdaq OMX Group, Inc. nor any of its affiliates makes any recommendation to buy or sell any financial product or any representation about the financial condition of any company or fund. Statements regarding Nasdaq’s proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

– NDAQG –

Media Relations Contact		Investor Relations Contact
Name: Camille Stafford		Name: Index Client Services
Email: Camille.Stafford@nasdaq.com		Email indexservices@nasdaq.com

20.

Why stock bulls are sitting on their hands again: Morning Brief

2022-12-08 10:20:40 by Jared Blikre from Yahoo Finance

This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Thursday, December 8, 2022

Today's newsletter is by Jared Blikre, a reporter focused on the markets on Yahoo Finance. Follow him on Twitter @SPYJared. Read this and more market news on the go with Yahoo Finance App.

What a difference a week makes.

Last Wednesday's Powell-fueled risk rally that landed the S&P 500 on top of its 200-day moving average for the first time since April has now been fully reversed and then some.

What was an upside breakout is now a failed upside breakout. A declining moving average ready to be rejected has again become a declining moving average that must be respected.

This, along with five straight days of declines in the S&P 500, now resets expectations about what Santa may or not deliver into year-end.

Sometimes in trading, patterns become obvious with hindsight — patterns that inform a host of woulda-coulda-shoulda trades which nearly perfectly reflect and predict price action over a period of time.

Along these lines, the CBOE Volatility Index — a/k/a the VIX — has provided a beautiful roadmap for trading the major indices in 2022.

A simple system emerges: buy the the S&P 500 when the VIX surges above the 35 level — indicating a relative amount of fear — and sell the S&P 500 when the VIX dips below 20, indicating relative complacency among investors.

S&P 500 vs. CBOE Volatility Index — This year's "easy" trade seen only with hindsight.

And though the VIX tends to move inversely with the direction of the S&P 500, it's rare to see a mean-reverting pattern play out this cleanly over the arbitrary time frame of one calendar year.

In the context of a market that is shifting from one looking for excuses to move higher into a market looking for reasons to remain range-bound, this emerging VIX-to-S&P relationship makes sense.

Of course, it's not as though anyone could have (or would have) predicted on January 1, 2022 that this pattern would emerge. Or that this relationship would emerge at these particular levels. Sell at 20 and buy at 35 are retro-fitted thresholds in the VIX. In life and in markets, hindsight remains crystal clear.

CHICAGO, IL - JUNE 06: Traders work on the new floor of The Chicago Board Of Options Exchange on June 6, 2022 in Chicago, Illinois. The new trading floor officially opened at the beginning of trading today with upgraded technology and infrastructure. (Photo by Jim Vondruska/Getty Images) — Traders work on the new floor of The Chicago Board Of Options Exchange on June 6, 2022 in Chicago, Illinois. (Photo by Jim Vondruska/Getty Images)

Nevertheless, with the latest "VIX sell" signal becoming a confirmed winner, it makes sense to prepare for the next potential "VIX buy" signal that could emerge and think about how that plays out around some of the important levels in the S&P 500.

A surge in the VIX back above 35 after a bout of selling in the stock market would no doubt get the attention of traders and algos the world over. But there's no way to predict where the S&P 500 would be trading at that point, or how long it will take to get there.

However, by way of recent comparison, it took about six weeks for the VIX to travel from 20 to 35 the last go-around — during the market sell-off that ran from mid-August to early October — which would point to a potential buy early in the new year.

Failing any signal clarity with the VIX, the S&P 500 could flash a bullish signal by simply reclaiming its 200-day moving average to the upside. This would likely (but not necessarily) occur in confluence with a simultaneous close over its 2022 negative trend line (the red line in the first chart), which would strengthen the signal.

The U.S. dollar could also add clarity, but it simply continues to consolidate under its 200-day moving average after last week's breakdown.

All in all, it's looking like another waiting game for S&P 500 bulls as the latest signal melts into noise. Next week's inflation reads and Fed meeting might clear that up. Or just add volume to the current market broadcast.

What to Watch Today

Economy

8:30 a.m. ET: Initial Jobless Claims, week ended Dec. 3 (230,000 expected, 225,000 during prior week)
8:30 a.m. ET: Continuing Claims, week ended Nov. 26 (1.618 million expected, 1.608 million during prior week)

Earnings

Broadcom (AVGO), Chewy (CHWY), Ciena (CIEN), Costco Wholesale (COST), DocuSign (DOCU), Domo (DOMO), Hello Group (MOMO), lululemon athletica (LULU), National Beverage (FIZZ), RH (RH), Vail Resorts (MTN)

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21.

Charting the Santa Claus Rally That Wasn't

2022-12-07 23:00:11 by Mark Vickery from Zacks

First off, let’s clear something up right now: the “official” definition of a “Santa Claus Rally” is a stock market catching a bid the week between Christmas and New Year’s Day — in other words: after Christmas, not before. So the rally many analysts had been cheering on as of Fed Chair Jay Powell’s latest public appearance indicating the Fed will begin the process of slowing interest rate hikes was not actually attributed to Santa Claus. It’s more closely aligned to other painful head-fakes investors have been prone to throughout 2022.

From the very start of this year, each market peak has been lower than the last, and each valley has been lower, as well. An air of positive bullishness accentuating the rosiest of possibilities has been routinely slapped down by the realities of persistent inflation and a Fed catching up fighting it with higher interest rates. This latest peak was no different: investors start talking about the Fed stopping and pivoting on interest rates, but in reality these events look to be deep into 2023 from this vista.

Next week, the Federal Open Market Committee (FOMC) reconvenes and will raise interest rates another half-point to put Fed funds over 4% for the first time in 15 years. This will happen a week from today. On Tuesday of next week, we’ll get fresh data on the Consumer Price Index (CPI) for November. Those will be the two largest potential market catalysts, perhaps through the end of the year. If we are to see a bump in market valuations before the end of the year, look toward next week to find it.

That 50 basis-point hike may spur semi-rally all by itself, perhaps to levels we reached mid-last week. Core CPI, year over year, was +7.7% last time around — much better than the 9%+ we’d seen earlier in the year, but still close to 4x higher than what the Fed continues to consider optimum inflation levels. Even core CPI at +6.3% is more than the optimum +2%. However, should another half-point or more be shed from November CPI year-over-year next Tuesday, this might poise markets for a holiday-situated upturn.

Otherwise, we’re now sitting around contemplating our navels and trying to figure out how the Fed lands the inflation plane without bumping (or crashing) into a recession. There’s an old saying: “Idle hands are the devil’s workshop.” Well, the same might be said for idle market participants: it doesn’t take much of an examination of the 2-year and 10-year yield curve inversion — less than 60 bps currently, by the way, a big improvement from early this morning — to start fretting that the inflation plane isn’t going to land safely.

We suggest doing what the weather has been doing over the past month here in Chicago: chill. This rate-hike cycle is already demonstrably in its late stages; we’re going to get where we need to go. There are plenty of reasons to believe if we do settle into a recession it won’t be particularly deep — banks are well situated with capital, industries are well stocked with labor. If the investment environment gets more difficult than it is right now, it will likely still bear a strong resemblance to our condition today.

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22.

7 Index Funds to Buy to Retire a Millionaire

2022-11-23 23:01:23 by Josh Enomoto from InvestorPlace

Recently, Barron’s published a thought-provoking op-ed which triumphantly declared that stocks have already bottomed, which might not be the positive catalyst for index funds, as you might think it is. After all, one of the key advantages of this broad-stroke investment strategy is to mitigate volatility. Through multiple bets via a benchmark indicator, investors are less likely to suffer catastrophic losses.

Among the central points of the aforementioned op-ed centered on inflation; namely, the trajectory of rising prices may have peaked, which would imply a relaxing of the Federal Reserve’s hawkish policy. That would be great for individual wagers, which if correct would likely draw better rewards than index funds to buy. But here’s the thing – no one really knows for sure what may transpire next. Even the confident Barron’s article left room for doubt. Therefore, index funds to buy remain incredibly relevant, if not more so right now.

SPY	SPDR S&P 500 ETF Trust	$402.42
QQQ	Invesco QQQ Trust	$288.82
MDY	SPDR S&P MidCap 400 ETF	$465.10
IWO	iShares Russell 2000 Growth ETF	$227.00
VFIAX	Vanguard 500 Index Fund	$370.33
VEIEX	Vanguard Emerging Markets	$24.43
VSMSX	Vanguard S&P Small-Cap 600	$374.90

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SPDR S&P 500 ETF Trust (SPY)

Man standing behind a Wall Street chart with S&P 500 on top of it. SPY stock.

Source: Funtap / Shutterstock

A venerable name among index funds to buy, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) generally corresponds to the price and yield performance of the benchmark S&P 500. On a year-to-date basis, SPY dropped a little over 16% of equity value, almost exactly the same as the S&P. Notably, though, in the trailing month, the SPY exchange-traded fund gained 5.5%, reflecting a possible momentum shift.

Fundamentally, the SPDR S&P 500 ETF focuses mostly on U.S.-based blue chips. Its top three holdings are Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). These stocks represent 6.84%, 5.39% and 2.5% of the SPY’s holdings, respectively. Sector-wise, the SPY mostly covers the technology sector with a 23.73% weighting, followed by healthcare and financial services at 15.24% and 13.85%, respectively. On a final note, the expense ratio for the SPY pings at 0.09%. This compares very favorably to the category average of 0.41%.

Invesco QQQ Trust (QQQ)

Source: Shutterstock

While the tech sector delivers the most innovative businesses to investors, it also features some of the highest-risk profiles in the market. Still, those with a patient outlook may want to consider the Invesco QQQ Trust (NASDAQ:QQQ). Per its prospectus, it generally corresponds to the price and yield performance of the Nasdaq 100 index. Since the start of this year, QQQ declined nearly 29%.

At the same time, QQQ gained nearly 3% in the trailing month, reflecting a rise in enthusiasm for growth-oriented investments. Still, individual names can be risky during this ambiguous environment, thereby making QQQ an ideal play among index funds to buy. Through the QQQ, you can gain balanced exposure to Apple, Microsoft and Amazon – its top three holdings. As well, you can acquire intriguing discounts such as Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA).

Obviously, tech represents the lion’s share of QQQ’s weighting at 48.23%. However, it also involves communication services and consumer cyclicals at weightings of 15.25% and 14.14%, respectively. Finally, the Invesco tech ETF features an expense ratio of 0.20%, below the category average of 0.56%.

SPDR S&P MidCap 400 ETF (MDY)

Source: Dmitry Demidovich / Shutterstock

While large caps usually offer the most stable investment opportunities among index funds to buy, they can also be boring. For those investors that want a little extra kick in their portfolio but without going purely speculative, the SPDR S&P MidCap 400 ETF (NYSEARCA:MDY) could be just right. Per the ETF’s prospectus, the MDY corresponds to the price and yield performance of the S&P MidCap 400.

Since the beginning of the year, MDY dropped 10.5% of market value, which is rather surprising. Ordinarily, you’d expect the more stable large-cap index funds to buy to outperform during market volatility. In the trailing month, MDY gained 9.5%, reflecting strong near-term momentum.

The ETF’s top three holdings are Steel Dynamics (NASDAQ:STLD), First Solar (NASDAQ:FSLR) and First Horizon (NYSE:FHN). Primarily, MDY’s weighting focuses on the industrials at 18.52%, followed by financial services and consumer cyclical at 15.54% and 14.26%, respectively. Finally, MDY features an expense ratio of 0.22%, slipping under the category average of 0.41%.

iShares Russell 2000 Growth ETF (IWO)

Illustration of an ETF in multiple sectors.

Source: SWKStock / Shutterstock

Investors can’t live on bread-and-butter investments alone but must venture out into the wilderness of high-growth opportunities on occasion. Fortunately, in this day and age, investors enjoy ample and diverse selections among index funds to buy. In particular, those that want to roll the dice a bit should check out the iShares Russell 2000 Growth ETF (NYSEARCA:IWO). Per its prospectus, the IWO fund tracks the investment results of the Russell 2000 Growth Index.

The aforementioned index measures the performance of small-cap stocks. Indeed, the top three holdings of IWO feature lesser-known enterprises: ShockWave Medical (NASDAQ:SWAV), Matador Resources (NYSE:MTDR) and Emcor Group (NYSE:EME).

Mostly, the iShares Russell 2000 targets the healthcare segment at a 21.81% weighting, followed by technology (20.72%) and industrials (17.35%). Geographically, the IWO is mostly geared toward U.S. companies with a 98% weighting. Finally, the IWO fund features an expense ratio of 0.23%, significantly below the category average of 0.56%.

Vanguard 500 Index Fund (VFIAX)

Source: Shutterstock

Although ETFs garnered much popularity as index funds to buy, traditional mutual funds deliver their own advantages. For instance, the latter offers a wider variety of offerings and investment strategies. As well, mutual funds often facilitate superior support services.

Regarding the Vanguard 500 Index Fund (MUTF:VFIAX), this investment tracks the S&P 500. Currently, the VFIAX fund dropped 16% YTD. However, in the trailing month, it’s up nearly 6%. The Vanguard 500’s top three funds are identical to the venerable SPY: Apple, Microsoft and Amazon. In terms of sector weighting, the VFIAX primarily targets tech (24.69%), followed by healthcare (14.16%) and financial services (12.96%).

Finally, the VFIAX features a net expense ratio of 0.14%, below the category average of 0.87%. As well, its management fee is 0.13%, which sits below the category average of 0.5%.

Vanguard Emerging Markets (VEIEX)

Source: Shutterstock

Usually, financial advisors will direct their clients to U.S.-based investments. Owning the world’s reserve currency and (so far) the top economy brings with it incredible privileges. Still, the U.S. is a mature market. For those seeking more robust upside – in exchange for a higher-risk profile – the Vanguard Emerging Markets (MUTF:VEIEX) may be an intriguing alternative.

Per the fund’s prospectus, VEIEX closely tracks the MSCI Emerging Market Index. Since the start of the year, the fund lost over 22% of market value. However, in the trailing month, it gained over 9%, possibly reflecting a sentiment shift. Its top three holdings are Taiwan Semiconductor (NYSE:TSM), Tencent (OTCMKTS:TCEHY) and Alibaba (NYSE:BABA).

Currently, this Vanguard fund’s top weighting concentrates on financial services at 21.09%, followed by technology (15.87%) and consumer cyclical (13.76%). Finally, VEIEX features a net expense ratio of 0.29%, well below the category average of 1.26%. As well, its management fee is 0.27%, below the category average of 0.88%.

Vanguard S&P Small-Cap 600 (VSMSX)

vanguard website displayed on a mobile phone screen representing vanguard etfs

Source: Shutterstock

While slow-and-steady investments in blue-chip enterprises may represent the surest way to wealth, it’s also time consuming. For those that want to quicken the pace in their index funds to buy, the Vanguard S&P Small-Cap 600 (MUTF:VSMSX) may provide an attractive alternative.

Since the January opener, VSMSX declined a bit over 12%, which again represents a relatively robust performance. In the trailing month, the mutual fund gained over 8%, demonstrating a return of bullish sentiment. According to its prospectus, the Vanguard S&P Small-Cap seeks to track the performance of the S&P SmallCap 600 index.

Presently, VSMSX’s top three holdings are Agree Realty (NYSE:ADC), ExlService (NASDAQ:EXLS) and Lantheus (NASDAQ:LNTH). Primarily, the fund targets the industrials sector with a 15.63% weighting, followed by tech (13.57%) and consumer cyclical (12.31%). Lastly, the VSMSX fund features a rock-bottom net expense ratio of 0.08%, well below the category average of 1.06%. Also, its management fee is 0.07%, below the category average of 0.69%.

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23.

Jobless Claims, Goods Orders, Airline Metrics Up Ahead of Holiday

2022-11-23 15:16:03 by Mark Vickery from Zacks

Wednesday, November 23, 2022

Pre-market futures are flat at this hour, following the release of economic and employment data that continues to suggest the U.S. economy is on sound footing — or at least not on the very brink of recession, as many analysts had forecast by now. We’re also embarking on Thanksgiving travel weekend, so trading volumes are depleted (and are expected to be on Friday’s half-day session, as well).

Initial Jobless Claims last week came in higher than expected: 240K, the most for a weekly tally since August and +17K from the previous week’s upwardly revised 223K. We’re off the July peak of 261K, but certainly higher than the 50-year lows we were seeing back in April of this year, when we were seeing reports down in the 160Ks. New claims are creeping up; will they continue on this trajectory, or will they ebb back down again?

Continuing Claims give us a bigger picture of the labor market, and here we see a rise week over week, as well: 1.551 million is notably higher than the 1.51 million reported a week ago. Longer-term jobless claims are reported a week behind new claims, so we may expected these numbers to keep moving higher in the next week. That said, we don’t appear to be in any pocket of labor market softness that would augment the Fed’s trajectory for interest rate increases — not yet.

Next week will tell us more, not only with fresh weekly claims data but with a private-sector monthly employment report from ADP ADP and next Friday’s non-farm payrolls for November. For October, we saw gains of 239K new jobs filled on the ADP report and 261K for non-farm payrolls. These continue to represent a healthy labor market — will we start to see evidence of this eroding? Analysts will certainly be paying attention.

Durable Goods Orders for October doubled expectations on headline: +1.0% versus +0.5% estimated. This is the highest print since June’s +2.3% and more than 3x higher than September’s +0.3%. Ex-transportation, +0.5% is the number — well above the 0.0% analysts were looking for. This is the highest read since March. Not exactly a ringing endorsement for a pending recession.

Non-defense, ex-aircraft orders — a proxy for “normal” business investment (computers, furniture, office space, etc.) swung to a positive +0.7% from the previous month’s -0.8%. Shipments, which fold into other economic data elsewhere, came in at a higher-than-expected +1.3%. So the business of trade is picking up; this is good news for everything except inflation metrics.

After the opening bell today, we’ll also get new S&P PMI data on both Manufacturing and Services for the month of November. Both appear headed subtly in opposite directions, but both look to continue to hover around the 50-level that separates expansion from contraction. Also a new University of Michigan consumer confidence survey is out later this morning, and the minutes from the latest Fed meeting are out this afternoon.

A quick glance at the current travel industry in the U.S. — with so many people on the go for the holiday — shows airlines on sounder footing than they’ve been in the past few years: staffing is +6.4% from a year ago, +2.7% from the previous comparable year of 2019. Flights have been reduced, but resources — attendants, mechanics, etc. — have increased. Also, jet fuel is down -37% versus Thanksgiving Week a year ago. Thus, major airlines, which are mostly down year-to-date but nowhere near Big Tech, are sitting pretty from this vista.

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