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Count Wharton Professor Jeremy Siegel among the stock bulls headed into the fourth quarter, versus unwavering bears like Morgan Stanley’s Mike Wilson, who sees a 10% drop ahead.
Siegel argues that bonds, which have been giving stocks the shove, have proven to be a terrible inflation hedge, but investors have forgotten that given it’s 40 years since the last big price shock. “Stocks are excellent long-term hedges, stocks do beautifully against inflation, bonds do not,” he told CNBC on Tuesday.
Don’t miss: ‘Bond math’ shows traders bold enough to bet on Treasurys could reap dazzling returns with little risk
Other stock cheerleaders out there are counting on a fourth-quarter rally, which, according to LPL Financial, delivers on average a 4.2% gain as portfolio managers snap up stock winners to spiff up performances.
Our call of the day from Evercore ISI’s head of technical strategy, Rich Ross, is in the bull camp as he declares the “high for equities is not in,” and suggests some stocks that will set investors up nicely for that.
Ross notes November is the best month for the S&P 500
SPX,
Russell 2000
RUT
and semiconductors
SOX,
while the November to January period has seen a 6% gain on average for the Nasdaq Composite
COMP.
He says if the S&P can break out above 4,430, the next stop will be 4,630 within 2023, putting him at the bullish end of Wall Street forecasts.
In addition, even with 10-year Treasury yields back at their highs, the S&P 500 is still ahead this week and that’s a “great start” to any rally, he adds.
Evercore/Bloomberg
What else? He says “panic bottoms” seen in bond proxies, such as utilities via the Utilities Select Sector SPD exchange-traded fund ETF
XLU,
real-estate investment trusts and staples, are “consistent with a bottom in bond prices,” which is closer than it appears if those proxies have indeed bottomed.
Evercore/Bloomberg
Among the other green shoots, Ross sees banks bottoming following Bank of America
BAC,
earnings “just as they did in March of ’20 after a similar 52% decline which culminated in a year-end rally which commenced in Q4.”
He sees expanding breadth for stocks — more stocks rising than falling — adding that that’s a buy signal for the Russell 2000, retail via the SPDR S&P Retail ETF
XRT
and regional banks via the SPDR S&P Regional Banking
KRE.
The technical strategist also says it’s time to buy transports
DJT,
with airlines “at bear market lows and deeply oversold,” while railroads are also bottoming and truckers continue to rise.
As for tech, he’s a buyer of semiconductors noting they tend to gain 7% on average in November, and Nvidia
NVDA,
has been under pressure as of late. He also likes software such as Microsoft
MSFT,
Zscaler
ZS,
MongoDB
MDB,
Intuit
INTU,
Oracle
ORCL,
Adobe
ADBE,
CrowdStrike
CRWD,
and Palo Alto Networks
PANW,
Evercore/Bloomberg
“The strong tech will stay strong and the weak will get strong,” says Ross.
The markets
Stocks
SPX
COMP
are dropping, with bond yields
BX:TMUBMUSD10Y
BX:TMUBMUSD02Y
mixed. Oil prices
CL.1,
BRN00,
have pared a stronger rally after a deadly hospital explosion in Gaza City, with Iran reportedly calling for an oil embargo against Israel. Gold
GC00,
has shot up $35.
For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
The buzz
Morgan Stanley
MS,
posted a 10% earnings fall, but beat forecasts, with shares down. Abbott Labs
ABT,
is up after upbeat results and aguidance hike and Procter & Gamble
PG,
is up after an earnings beat. Tesla
TSLA,
(preview here) and Netflix
NFLX,
(preview here) will report after the close.
Read: Ford CEO says Tesla, rival automakers loving the strike. He may be wrong
United Airlines shares
UAL,
are down 5% after the airline lowered guidance due to the Israel/Gaza war. Spirit AeroSystems
SPR,
surged 75% after the aircraft components maker announced a production support deal with Boeing
BA,
Housing starts came short of expectations, with the Fed’s Beige Book of economic conditions coming at 2 p.m. Also, Fed Gov. Chris Waller will speak at noon, followed by New York Fed Pres. John Williams at 12:30 p.m. and Fed Gov. Lisa Cook at 6:55 p.m.
China’s third-quarter GDP rose 4.9%, slowing from 6.3% in the previous quarter, but beating expectations.
Middle East tensions are ratcheting up with protests spreading across the region after a massive deadly blast at a Gaza City hospital, and airports evacuated across France over terror threats. President Biden told Israeli Prime Minister Benjamin Netanyahu that “it appears as though it was done by the other team.”
Read: Treasury says Hamas leaders ‘live in luxury’ as it unveils new sanctions
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The tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
| Ticker | Security name |
|
TSLA, |
Tesla |
|
AMC, |
AMC Entertainment |
|
AAPL, |
Apple |
|
GME, |
GameStop |
|
NIO, |
Nio |
|
AMZN, |
Amazon |
|
PLTR, |
Palantir |
|
MULN, |
Mullen Automotive |
|
TPST, |
Tempest Therapeutics |
|
TTOO, |
T2 Biosystems |
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