Defensive stocks and the Nasdaq were in a rare alignment, leading Thursday as much of Wall Street watched Federal Reserve Chairman Jerome Powell continue his economic tightrope walk.
A day after telling the Senate Banking Committee that a recession is “certainly a possibility,” Powell told the House Financial Services Committee that “I don’t think a recession is inevitable,” but again stressed the importance of reducing inflation at 2. %
“With Chairman Powell finally acknowledging that while a soft landing is possible, the Fed’s commitment to reduce inflation could push the economy into a recession, the market is oscillating between a growth scare and an outright recession,” he says. Quincy Krosby, Equity Director. Strategist at LPL Financial. “With a labor market still strong, there is a growing sense that the Fed is now moving quickly to make up for lost time in its fight against inflation.”
The tightness of the labor market remains evident in the latest unemployment data from the Department of Labor. Initial claims for the week ending June 18 came in at 229,000, slightly above the median forecast of 226,000, but down from the previous week’s revised 231,000.
However, June’s Purchasing Managers’ Index (PMI) showed some signs of strain, with the manufacturing reading falling to 52.4 from 57.0 and the services PMI dipping to 51.6 from 53.4. While both figures still represent an expansion, that expansion was much slower than economists expected.
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The 10-year Treasury yield continued to fall, to a session low of 3.01%, as investors bought bonds and hedged. (Remember: Bond prices and yields move in opposite directions.) People also looked for safety in parts of the stock market: utilities (+2.4%) led the way, with health care (+2.2%) and consumer staples (+1.9%) also posts decent gains. But falling rates also allowed tech and tech stocks like amazon.com (AMZN, +3.2%) and to sense (INTU, +5.2%) to float higher.
The result was a solid advance of 1.6% in the Nasdaq Composite, to 11,232. It was followed by a gain of 1.0% to 3,795 for the S&P 500while the Dow Jones Industrial Average it closed 0.6% higher at 30,677.
Other news in the stock market today:
- the small cap Russell 2000 it enjoyed a 1.3% improvement to 1,711.
- us crude oil futures it lost 1.8% to settle at $104.27 a barrel.
- gold futures it fell 0.5% to close at $1,829.80 an ounce, marking a fourth straight loss.
- Bitcoin enjoyed a 3.9% rise to $20,901.70. Bitcoin operates 24 hours a day; the prices informed here are from 4 pm)
- We work (WE) soared 15.7% after Credit Suisse analyst Tayo Okusanya initiated coverage of the higher-rated shared office space stock with a price target of $11, about 76% higher than the today’s closing price of $6.26. Shared office stocks are one of the top options in Credit Suisse’s real estate investment trust (REIT) hedge and will likely benefit from “a combination of technological innovation (eg, 5G), industry disruption ( for example, hybrid working and co-working adoption), aging demographics, and general trends in American migration,” says Okusanya.
- KB Home (KBH) soared 8.6% after the homebuilder reported earnings. In its fiscal second quarter, KBH posted better-than-expected adjusted earnings of $2.32 per share and revenue of $1.7 billion, representing year-over-year growth of 55% and 19%, respectively. Still, CFRA Research analyst Kenneth Leon maintained a hold rating on KBH shares. “Our Hold rating on KBH is based on an expected decline in home purchase demand, with mortgage rates rising above 6% and rising,” says Leon. “Bearish views on rising rates and housing affordability are likely to hurt KBH’s traffic and performance.”
Is artificial intelligence the smart game?
Technology stocks have been among the best performers since the S&P 500 bottomed out (or at least as low as it has been) on June 16. The sector has risen 4.6% since then, a welcome respite amid what has been a more than 25% recession in 2022.
But perhaps the time is coming for investors to pick up some of these battered tech stocks.
You might consider looking at some of the hardest-hit tech areas, as some industries have been hit harder than others. Artificial intelligence (AI), for example, has taken a really nasty hit on the chin. Using TrueShares Technology, AI & Deep Learning Fund (LRNZ), a thematic exchange-traded fund (ETF), as a proxy, AI shares are down almost 40% this year.
AI, however, is a massive and growing market that is expected to reach $62 billion by the end of 2022, a 21% increase in size from 2021. That makes investments in the industry, like these 10 stocks. of AI, worth monitoring for growth investors. , especially when they can be bought (relatively) cheap.