This is where we are after this week's big back-to-back market declines

[ad_1]

The stock market had another nasty down session on Tuesday amid concerns that the Federal Reserve could raise interest rates to higher levels for an extended period of time and whether the economy would slide into recession. According to The Wall Street Journal, the central bank is considering rate hikes of more than 5% next year to combat inflation, particularly high wage inflation, as seen in last week’s November employment report from the government. The current range for the Fed’s short-term interest rate is 3.75% to 4%. While a smaller 50 basis point increase is expected at next week’s Fed meeting after four consecutive 75 basis point increases, what could happen in 2023 is for stocks to run wild for a second session in a row. Cash is a friend when the market is going through a rough patch. However, we are still bullish on individual stocks over the long term and are scanning the market for situations that could slowly put some money to work. Nothing aggressive, of course, but our cash position of about 12% gives us the opportunity to become more opportunistic as prices fall. What we look for We look for situations where we can improve or potentially exceed our average cost base if we sold a little higher. But one of the most important attributes we look for before buying is confidence in short-term earnings. Yes, this means a company needs to make money, a theme we’ve been hammering on all year. We also favor resilience in uncertain economic conditions. That’s why we rely heavily on our staples like Procter & Gamble (PG) and Constellation Brands (STZ), healthcare names like Johnson & Johnson (JNJ), Eli Lilly (LLY), Humana (HUM), and Danaher (DHR), and also some select old-school cyclical stocks like Linde (LIN) and Honeywell (HON) that have the right end markets for the current environment. Honeywell CEO Darius Adamczyk was on CNBC Tuesday and gave us an encouraging look at how the company plans to navigate these tricky economic waters. We think Honeywell is well positioned to capitalize on strengths. The market is already looking ahead to 2023 earnings, and these are the types of companies with reliable growth prospects no matter what twists and turns the economy throws at them. On the other hand, technology stocks are still unpredictable for new money because of their expensive valuations, inflated cost structures and exposure to parts of the economy that are weakening. Watching our Bullpen Outside of the current portfolio, we always keep an eye on our watchlist Bullpen companies such as Emerson Electric (EMR). However, as Jim Cramer wrote Sunday, we think the stock has had too much of a run since late September to start buying now. Patience has been rewarded countless times this year and we want to see more pullbacks before buying. We are also working on renewing our Bullpen as we usually like to do every few months. We plan to update the Investing Club with some new additions in the coming days. (Jim Cramer’s Charitable Trust is long PG, STZ, JNJ, LLY, HUM, and Mr. See here for a full list of the shares.) As a subscriber to the CNBC Investing Club with Jim Cramer, you receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charity’s portfolio. If Jim has talked about a stock on CNBC TV, he will wait 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIAL OBLIGATION OR DUTY EXISTS OR IS CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Traders work on the floor of the New York Stock Exchange during morning trading on December 6, 2022 in New York City. The Dow Jones opened low this morning and continued its downtrend with a dip of more than 400 points as the stock market closed on Monday.

Michael M. Santiago | Getty Images

Sources

1/ https://Google.com/

2/ https://www.cnbc.com/2022/12/06/heres-where-we-stand-after-this-weeks-big-back-to-back-market-declines.html

The mention sources can contact us to remove/changing this article

[ad_2]

The Latest

Trump administration cancels $766 million Moderna contract to fight pandemic flu

Multi-country outbreak of mpox, External situation report #53

From Sources To Serving Sizes, What You Need To Know About Protein

ACOG Issues Pain Management Guidelines for Procedures

This is where we are after this week’s big back-to-back market declines

Leave a Reply

This is where we are after this week’s big back-to-back market declines

Leave a Reply

Related Posts