Stocks Sank As Sentiments Plummeted

STATE OF THE MARKETS

Stocks sank as sentiments plummeted. US stocks sank on Tuesday after investors received mixed earnings reports with lower consumer confidence and yields inversion, sending CNN sentiments sharply lower to 27 from 40 yesterday. Dow (-2.38%), Nasdaq (-3.95%) and S&P (-2.81%), including Russell (-3.26%) closed in the red while flights to safety were noted with yields of various maturities fell lower. The 5Y (2.76%) and 7Y (2.78%) yields were higher than the 10Y (2.75%), sending signals of imminent recession. Cash demand sent the Dollar index past the 102.50 minor handle at writing.

In the commodities market, Dollar strength failed to push crude lower as the black gold continued to receive strong bids higher to close above $101.30/bl. Similarly, gold remained supported above $1,880.50/oz as markets continue to weigh Fed’s intention to raise interest rates. Elsewhere, iron ore dipped lower to $152/tn on demand concerns amid continued China lockdown.

In the FX space, safe haven Yen seized the reign in medium term demand from Dollar while retaining the helm in short term accounts. Sterling fell further to offers while demand for the comdolls trio returned.  Long term sentiments turned more bearish as Euro flipped to demand replacing Aussie.

On Wednesday, markets seemed less optimistic about the peace talks but look forward to seeing earning reports from CME Group (CME), Ford (F), Kraft Heinz (KHC), PayPal (PYPL), Amgen (AMGN), Qualcomm (QCOM), Metaverse (FB) and Boeing (BA) as well as the latest figures on US housing markets. EIA petroleum status reports will  be in the spotlight for energy traders.

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OUR PICK – Macy’s Inc (M, NYSE)

Undervalued with dividends. Macy’s might not be a hot stock that would rake 1,000% gains but definitely a long term keep for retirement funds. Depending upon your investment objectives, this stock gives 2.59% dividends with potential for capital appreciation as it’s fairly valued around $35.20 (about 45% upside) by S&P and at less than six times earnings. A high quality company with a strong balance sheet and growth stability as it has been around since 1830. We would buy on dip for a long term keep on a cash account.

Note: Please contact your account manager if you need a copy of fundamental reports on this stock.

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