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4 Safe Picks as a Hawkish Fed Spurs Sell-off on Wall Street
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September traditionally has been one of the worst periods to have money in the stock market. This September is also in no way different, with the major bourses taking a beating last week. The S&P 500 and the Nasdaq, in particular, registered their biggest weekly percentage drop since March, per Dow Jones Market Data.
The broader S&P 500 and the tech-laden Nasdaq notched their third successive weekly decline, while the 30-stock Dow ended in the red for the fourth consecutive trading day on Sep 22, witnessing its longest daily declining streak since June.
Stocks sold off in recent times spurred by an aggressive monetary policy from the Federal Reserve. The Fed has shown intent to increase interest rates further this year, and limit cuts next year. Needless to say, that rate hike doesn’t bode well for economic growth as it hampers consumer spending and raises the cost of borrowing.
The Fed, in its recent policy meeting, said that it expects another 25-basis point interest rate hike by the end of this year. What’s more, interest rates are estimated to stay higher for longer, with only two rate cuts expected next year, two less than what was earlier projected.
The central bank has taken a hawkish stance to tame elevated inflation. The Fed’s favored inflation gauge, the core personal consumption expenditures index came in at 4.2% in July, which is way higher than the central bank’s desired target of 2% (read more: Fed Anticipates Higher Rates for Longer: 5 Big Winners).
Similarly, consumer and wholesale prices are still running hot. The consumer price index jumped 3.7% in August from a year ago, while the producer price index advanced 1.6% last month over the past 12-month period. The uptick in oil prices worldwide perked up price pressures (read more: 3 Inflation-Proof Consumer Staples Stocks Worth a Watch Now).
Nonetheless, with the stock market finishing a tumultuous week amid a hawkish Fed outlook, it’s now judicious for investors to place bets on safe stocks like Magellan Midstream Partners , Trinity Capital (TRIN - Free Report) , Runway Growth Finance Corp. (RWAY - Free Report) and Postal Realty Trust (PSTL - Free Report) to counter market upheavals and earn a steady income.
These stocks have a low beta (ranges from 0 to 1), making them unperturbed to market vagaries. These stocks also provide dividends, meaning they have a solid business model that helps them counter market volatility. They have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Magellan Midstream Partners is a master limited partnership that owns and operates a diversified portfolio of energy infrastructure assets. The company has a beta of 0.9.
MMP has a dividend yield of 6.1%. The Zacks Consensus Estimate for its current-year earnings has moved up 1.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 11.7%.
Trinity Capital is an internally managed business development company. The company has a beta of 0.62.
TRIN has a dividend yield of 13.2%. The Zacks Consensus Estimate for its current-year earnings has moved up 2.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 2.3%.
Runway Growth Finance is an externally managed business development company. The company has a beta of 0.74.
RWAY has a dividend yield of 12.4%. The Zacks Consensus Estimate for its current-year earnings has moved up 3.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 29.5%.
Postal Realty Trust is a real estate investment trust. The company has a beta of 0.64.
PSTL has a dividend yield of 6.9%. The Zacks Consensus Estimate for its current-year earnings has moved up 4% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 3%.
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4 Safe Picks as a Hawkish Fed Spurs Sell-off on Wall Street
September traditionally has been one of the worst periods to have money in the stock market. This September is also in no way different, with the major bourses taking a beating last week. The S&P 500 and the Nasdaq, in particular, registered their biggest weekly percentage drop since March, per Dow Jones Market Data.
The broader S&P 500 and the tech-laden Nasdaq notched their third successive weekly decline, while the 30-stock Dow ended in the red for the fourth consecutive trading day on Sep 22, witnessing its longest daily declining streak since June.
Stocks sold off in recent times spurred by an aggressive monetary policy from the Federal Reserve. The Fed has shown intent to increase interest rates further this year, and limit cuts next year. Needless to say, that rate hike doesn’t bode well for economic growth as it hampers consumer spending and raises the cost of borrowing.
The Fed, in its recent policy meeting, said that it expects another 25-basis point interest rate hike by the end of this year. What’s more, interest rates are estimated to stay higher for longer, with only two rate cuts expected next year, two less than what was earlier projected.
The central bank has taken a hawkish stance to tame elevated inflation. The Fed’s favored inflation gauge, the core personal consumption expenditures index came in at 4.2% in July, which is way higher than the central bank’s desired target of 2% (read more: Fed Anticipates Higher Rates for Longer: 5 Big Winners).
Similarly, consumer and wholesale prices are still running hot. The consumer price index jumped 3.7% in August from a year ago, while the producer price index advanced 1.6% last month over the past 12-month period. The uptick in oil prices worldwide perked up price pressures (read more: 3 Inflation-Proof Consumer Staples Stocks Worth a Watch Now).
Nonetheless, with the stock market finishing a tumultuous week amid a hawkish Fed outlook, it’s now judicious for investors to place bets on safe stocks like Magellan Midstream Partners , Trinity Capital (TRIN - Free Report) , Runway Growth Finance Corp. (RWAY - Free Report) and Postal Realty Trust (PSTL - Free Report) to counter market upheavals and earn a steady income.
These stocks have a low beta (ranges from 0 to 1), making them unperturbed to market vagaries. These stocks also provide dividends, meaning they have a solid business model that helps them counter market volatility. They have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Magellan Midstream Partners is a master limited partnership that owns and operates a diversified portfolio of energy infrastructure assets. The company has a beta of 0.9.
MMP has a dividend yield of 6.1%. The Zacks Consensus Estimate for its current-year earnings has moved up 1.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 11.7%.
Trinity Capital is an internally managed business development company. The company has a beta of 0.62.
TRIN has a dividend yield of 13.2%. The Zacks Consensus Estimate for its current-year earnings has moved up 2.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 2.3%.
Runway Growth Finance is an externally managed business development company. The company has a beta of 0.74.
RWAY has a dividend yield of 12.4%. The Zacks Consensus Estimate for its current-year earnings has moved up 3.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 29.5%.
Postal Realty Trust is a real estate investment trust. The company has a beta of 0.64.
PSTL has a dividend yield of 6.9%. The Zacks Consensus Estimate for its current-year earnings has moved up 4% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 3%.