In hisDaily Market Notes report to investors, Louis Navellier wrote:
The market is looking for footing after the worst day since June.
Stocks Grind Higher Amid Earnings Beats
Stocks are mixed and muted this morning but grinding higher as the day progresses. Both Macy’s (NYSE:M) and Dick’s Sporting Goods (NYSE:DKS) reported earnings beats top & bottom, with Macy’s guiding down modestly for the second half while Dick’s raised its full-year guidance. Both reported reductions in same-store sales but less than forecasted. Macy’s is up +7% and Dick’s is up 4% on the day.
Q2 2022 hedge fund letters, conferences and more
Tech is trading higher on the heels of strong numbers out of Palo Alto Networks (NASDAQ:PANW) including an upbeat outlook and a 3-for-1 stock split. PANW is up 12% this morning. On the flip side, Zoom Video Communications (NASDAQ:ZM) had a miss on the top line, a beat on the bottom, and a cut on the full-year forecast and is down 11%. Since last Tuesday's close, tech has struggled due to high valuations with Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) down 5%, while more conservative names in consumer staples are holding up better: Procter & Gamble (NYSE:PG) -0.4%, Coca-Cola (NYSE:KO) -1.3%.
Home builders continue to report tough times due to the 30-year low in affordability with new home sales for July coming in -12% m-o-m, much lower than the -2.7% forecast. The more speculative end of the market has seen the most damage as reflected in the ARK Innovation ETF down 12% since last Wednesday.
Focus On The Fed
The focus remains on the Fed discussion at the end of the week regarding its commitment to aggressive monetary tightening to rein in inflation. With crude oil up 3.6% today to $93.6/bbl and natural gas at almost $10/mcf, a 14-year high, keeping inflation concerns heightened, albeit retail gasoline, the most visible energy component now down 70 days in a row.
The 10-year US yield is holding above 3% and the yield inversion is shirking with the 2-year down 7bps to 3.27%.
Go For Domestic
Today, we saw the US Purchasing Managers Index (PMI) for August come in light at 44.1 vs the 49.2 forecast, while the manufacturing PMI was also light at 51.3 vs the 52.0 forecast. The Global Composite PMI for August was also light at 45.0 vs the 49.0 forecast, the lowest report since June '20, feeding recession fears.
Keep looking for opportunities in strong earners with reasonable P/Es, with a bias of domestic exposure to reduce the impact of the very strong US dollar, now near a 19-year high.
