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Plus 5 New Strong Buys for Today
Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks Down To Start The Week

Stocks closed lower across the board yesterday.

Nothing new on the home front. Same concerns yesterday as there were last week and for the last couple of months: inflation, supply and worker shortages, the fate of the spending bills in Congress, and the taxes to go along with it. You can also add in the debt ceiling, which will need to be acted on by mid-October at the latest.

Stocks have been powering higher for the last couple of months (last week notwithstanding), in spite of these concerns.

But yesterday, the market pulled back. It wasn't huge. (It was 'only' the worst drop in 4 months.) But it was enough to take notice.

The thing that likely tipped stocks over yesterday (it was ready for a pullback anyway), was news out of China regarding a large real estate developer's debt. The company is Evergrande, and they are more than $300 billion in debt. Some have begun comparing Evergrande to the Lehman debacle back in 2008. And everyone is watching to see if the Chinese government comes in to assist.

In the meantime, they were down -10% yesterday, and the Hang Seng Index was down -3.3%.

The S&P was down by more than -2.85% at its worst, before recovering a bit to close down -1.70% by day's end.

So the list of things to worry about has just grown to include China now.

Lots of good things to get excited about too. But with the market under pressure, this could be the pullback everyone has been waiting for.

If so, pay attention. Because with historic growth still in the forecast (full-year GDP is still expected to come in at the fastest pace in 37 years), this could be the buying opportunity everybody has been waiting for as well.

So brush off your watchlist. You might just be able to pick up some of your favorite stocks at an unexpected but welcomed discount.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research


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