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This apprehension stems from the stronger-than-expected September jobs data, which could prompt the Federal Reserve to sustain its rate-raising policy. The yield on the 10-year Treasury note reached a 16-year high, directly affecting consumer loans and raising concerns about a potential slowdown in business and consumer spending, as cautioned by economist Bernard Baumohl.
Interestingly, despite these market conditions, McDonald’s (NYSE:MCD) has shown remarkable resilience. According to InvestingPro data, the fast-food giant has a solid market capitalization of $180.82 billion USD and a P/E ratio of 22.8, indicating strong investor confidence in the company’s long-term growth potential. Additionally, the company’s revenue growth for the second quarter of 2023 was 13.62%, demonstrating McDonald’s ability to generate profits even in a challenging economic environment.
Moreover, McDonald’s has managed to increase its quarterly dividend by 10%, reaching a record high implied yield that surpasses those of the Consumer Discretionary Select Sector SPDR ETF XLY and the S&P 500 index SPX. This achievement comes amid a broader selloff in consumer-staple stocks led by Walmart (NYSE:WMT) and Costco (NASDAQ:COST). This aligns with an InvestingPro Tip that McDonald’s has raised its dividend for 48 consecutive years, a testament to the company’s financial health and commitment to rewarding shareholders.
As these economic circumstances unfold, McDonald’s is scheduled to announce third-quarter results on Oct. 30. The company’s performance during this period of rising interest rates and robust jobs data will provide further insight into the resilience of the fast-food giant amidst challenging market conditions.
InvestingPro Tips also highlight that McDonald’s operates with a high return on assets and is a prominent player in the Hotels, Restaurants & Leisure industry. These factors, combined with the company’s consistent profitability, as indicated by a 16.05% return on assets in the second quarter of 2023, reinforce McDonald’s position as a solid investment choice.
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