You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Profit from the Pros By Kevin Matras Executive Vice President
Stocks End Lower After Fed Raises Rates
Stocks closed lower yesterday after the Fed raised rates by 75 basis points.
The decision to raise the Fed Funds rate by 75 bps, which brings the midpoint to 3.13%, was widely expected.
What caught the market by surprise was the forecast that rates might need to get as high as 4.40% by year's end. And hit 4.60% in 2023 before holding it there for a while.
Previously, the Fed had said they see the target rate getting to 3-3.5% by year's end, while other members recently said they see it getting above 4% by early next year.
The accelerated timeline to 4.4% within the next 3 months, and 4.6% shortly thereafter, while not a monumental difference size-wise or time-wise, than what was previously expected, did underscore the seriousness of the need to get inflation under control, and the commitment of the Fed to do so.
Stocks were up right before the announcement. Then they sank on the news. But then rallied to new intraday highs, before finally tumbling into the close.
To reach 4.4% by year's end will require another 1.25% between the next two Fed meetings in November and December. (I'm sure speculation will grow about the possibility of doing an intra-meeting hike as well. If the Fed is that intent on raising to 4.4% so quickly, why wait out the month of October before raising by another 50 or 75 bps in November?) Absence an intra-meeting hike, that would mean another 75 bps at one of the next two meetings, and 50 bps at the other.
The Fed did say they will continue to look at the data. And will take each meeting as it comes. Nonetheless, their estimated target rate has increased, and has been moved up on the calendar.
Additionally, they lowered their growth forecast for all of 2022 to 0.2% from their previous estimate of 1.7%. And they put 2023 at 1.8%.
They also expect to see the unemployment rate increase to 4.4% next year vs. the current 3.7% it is now.
We will see how the market reacts to this news today, after letting it digest overnight. (It would not be uncommon to see the market head in the opposite direction vs. what they did on the day of the announcement.) We shall see.
For now, the June lows continue to hold.
And nothing is a bad as the forecasts we had in June when people were predicting a deep recession.
True, growth has slowed. And 0.2% for the full year is hardly robust. But it's far less dire than what was once predicted. And 1.8% next year is a notable increase.
In the meantime, it remains a stock pickers market.
In spite of the market's struggles this year, there are hundreds and hundreds of stocks up double-digits this year. In fact, there's 898 stocks up 10% this year; 626 up more than 20%; 278 up more than 50%; and 112 stocks up over 100% this year.
And with so many spectacular companies on the move, it just goes to show you don't need to be as good as Warren Buffett to make money in the market.
But reading about how he does it can't hurt.
To learn three secrets that Warren Buffett uses to find profitable value stocks, be sure to read our latest commentary...
Confidently navigate today's market with Zacks' private investment recommendations. These picks are based on the system that has more than doubled the market since 1988 (including bear markets) and which pointed investors to 29 double- and triple-digit winners this year alone.
Starting today, for one month, you can follow these exclusive portfolios in real time from the best stocks under $10, to Warren Buffett-style value plays, and to high-paying dividend stocks. Total cost $1. No gimmicks.
Use the Zacks Mutual Fund Rank, a quantitative ratings system designed to help you find the best funds to beat the market. See which ones to buy, which to sell and track your favorite mutual fund family.
Here are 5 stocks added to the Zacks Rank #1 (Strong Buy) List today. Read More »
Download our app for convenient on-the-go access to even more—daily and weekly newsletters published by Zacks experts, proprietary research and tools, and Portfolio Tracker on Zacks.com.
Visit Success Stories to hear how Zacks research, tools and portfolios help our members outperform the market.
Get all of our market insights and much more when you connect with us.
This free resource is being sent by Zacks.com. We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research is not a licensed securities dealer, broker or US investment adviser or investment bank. The Zacks #1 Rank Performance covers the period beginning on January 1, 1988 through August 1, 2022. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank #1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed above.
Zacks Emails If you would prefer to not receive future profit-producing emails from Zacks.com the primary purpose of which is the commercial advertisement or promotion of a commercial product or service, then please click here and confirm your request. If you have trouble with the unsubscribe link, please email firstname.lastname@example.org.
Zacks Investment Research 10 S. Riverside Plaza, Suite 1600 Chicago, IL 60606
Due to inactivity, you will be signed out in approximately: