(Thursday Market Open) It’s the first day of September and already the month appears to be living up to its bad reputation as equity index futures point to a lower open. Potential Market Movers As I mentioned in my September Outlook , the month of September has historically been the worst month on average for the S&P 500® index (SPX) and the Dow Jones Industrial Average ($DJI). While there’s no guarantee this will be the case by the end of September, so far, the month is not off to a good start. One reason is that China announced that it is locking down more than 21 million residents in the city of Chengdu, which reported 700 new cases of COVID-19. As the northern hemisphere moves into winter months, global cases are likely to rise. This means that lockdown could be an ongoing problem for China’s economy and the global supply chain as China sticks to its zero-COVID policy. Chinese stocks were lower on the news with Shanghai composite down 0.54% and the Heng Seng tumbling 1.79%. China’s COVID-19 risk is likely contributing to falling oil prices because lockdowns lead to lower demand.
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While few enjoy the pain of red ink in the markets when volatility strikes, forward-thinking investors can use the current circumstances to load up on intriguing stocks to buy. To be sure, fear has once again crept into the equities sector. Primarily, Federal Reserve chair Jerome Powell sounded the alarm on inflation. During his policy speech at the annual economic symposium at Jackson Hole, Wyoming, Powell reiterated his hawkish intentions . Adding to the woes for bullish investors is that other international central banks stand poised to deliver similar directives. For instance, record inflation in the Eurozone recently pushed the 10-year German bund yield to a two-month high. Therefore, this dynamic increases the odds the European Central Bank will tighten its monetary policy aggressively. Ordinally, that wouldn’t bode well for stocks to buy. However, certain companies may perform better than others during this drought. Whether that’s because they’re particularly relevant or are structured for resilience during downcycles, investors should consider the below sell-off stocks to buy.
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Though the benchmark equity indices have made some robust moves recently, their performance since the beginning of the year remains negative, with growth stocks underperforming. Nevertheless, for contrarians willing to ride out potential turbulence, there may currently be an opportunity to steadily acquire positions while stock prices are relatively cheap. For one thing, buying growth stocks following a correction theoretically expands investors’ return potential. Starting from a lower threshold, they will have more runway to work with than those buying shares at higher valuations. As well, the law of small numbers – the concept that higher-magnitude gains are easier to achieve from lower starting points – may provide them with a tailwind. Secondly, U.S. equities generally have an upward bias. Partly due to the massive size of the U.S. economy and the dollar’s status as the world’s reserve currency, it’s good to be an American investor. Therefore, those investing in U.S. stocks can be fairly confident that even beaten-down growth names can rebound if they’re tied to fundamentally sound businesses.
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We may be headed for a global recession and that means the best stocks to buy are cynically geared rather than say focused on ESG investing principles. It’s not hard to see why. For instance, evidence indicates that people drink more alcohol during hard economic times . Therefore, what better way to address this dynamic than acquire shares of alcoholic beverage companies? However, not every market participant shares the same priorities. Increasingly, both millennials and members of Generation Z care strongly about environmental, social and governance (ESG) principles. It’s to the point now where companies ignoring the concerns of ESG investing can face repercussions. Plus, many people believe strongly that making money without regard to ethical standards is inappropriate. Further, it might not be beneficial on the bottom line to always think cynically. According to Harvard Business Review, ESG investing can promote positivity across the board and just as well, be profitable in the process .
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Stocks were modestly lower on Thursday as investors monitored the health of the economy ahead of a key inflation report. The Dow Jones Industrials were negative 129.29 points midday to 32,781.61. The S&P 500 handed back 20.85 points, to 4,094.92. The NASDAQ Composite fell 66.72 points to 12,019.55. Casino stocks were some of the worst performers in the S&P 500, with Las Vegas Sands falling 3.4% and Caesars Entertainment falling 2.3%. Chinese tech stocks reversed recent gains, with Pinduoduo falling more than 6%. Shares of Five Below dropped more than 5% after first-quarter sales came in softer than anticipated and the retailer shared weak guidance for the current period. Tesla rose more than 2% after UBS upgraded the stock to buy. The firm also said the electric vehicle maker can rally more than 50% from current levels. Shares of Target were little changed after the company announced a dividend hike. The payout raise comes after a disappointing first quarter and a profit warning for the second quarter from the retail giant.
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