Patterson said the Fed — and investors — need to still be concerned about how so-called core inflation (excluding food and energy) has yet to cool dramatically. Economists at Barclays said in a report Thursday that they now expect another three-quarters of a percentage point rate increase in November and December and then a half-point hike at the Fed’s February 2023 meeting. It was a dramatic turnaround for stocks, which plunged after the opening bell after the CPI report came out. The Dow was down 550 points early on in the trading session. Fertilizer stocks and energy plays were significantly boosted. With the West trying to cut off Russian oil and gas imports, further gains are possible.

Cboe’s growth strategy revolves around expanding product line across asset classes, broadening geographic reach, diversifying business mix with recurring revenues and leveraging technology. Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time. After taking a breather last week, mortgage rates rose again — moving even closer to 7%.

But Hogan believes we’re closer to the end of the stock market sell-off than the beginning. “If there is a silver lining to that historical data,” he said, “it is that any of the observations where the decline has started in the first half of the year, we got back to break-even by the end of the year every time.” The graph below shows your profit or loss, depending on ZYX’s market price on the expiration date of the option.

Demand for those long-dated bonds drives prices higher and yields lower. So, thinking about where corporate bonds should be going forward. Now, we are starting to see some more bankruptcies out there, but the bankruptcies that I’ve seen have been more either in the private markets or among middle market and smaller companies. We’re not seeing a pickup in bankruptcies yet in the public markets.

  1. They pay a fixed interest rate until they mature, at which point the bondholder recoups the principal.
  2. It’s the sector that’s very correlated with interest rates.
  3. In fact, a blog post from the Federal Reserve Bank of St. Louis says the implied “recession probability would be unprecedentedly high for a false positive.”
  4. Stocks roared back in late morning trading after plunging at the opening bell.
  5. Of course, with as much as the market has moved over the past week and a half, we’ll start seeing some more negative returns or more negative in that slide on the left.

My Portfolio – Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank. Zacks Portfolio Tracker on provides 24/7 monitoring of your stocks and will give you the information you need to help you determine when to buy, hold or sell your stocks. You’ll receive continuously updated Zacks Rank and Style Scores, Earnings Estimate Revisions, Broker Recommendation Changes, Earnings Surprises and more. Note that you should also add your mutual fund and ETF positions to monitor changes in their Zacks Rank as well. Higher rates, decent loan demand, efforts to improve revenues and expansion into new markets will likely aid Bank of America.

How do investors use put selling?

In that case, you might sell a put option with a strike price of $50 and a premium of $5, and be happy even if the buyer exercises the option and sells you the shares at the strike price. If you sell a lot of put options, you may also want to keep an eye on market volatility levels, as measured by benchmarks like the VIX volatility index. Volatility is a factor in option pricing, and low volatility can push down the premiums that put sellers can collect. To ensure that put sellers can fulfill their obligation to buy the underlying stock upon exercise, many brokers require investors to have a margin account with a certain level of buying power to sell puts.

“The year thus far has seen a market that has struggled to price in some worst-case scenarios as it pertains to both inflation and monetary policy,” National Securities Chief Market Strategist Art Hogan said. The Dow Jones Industrial Average and other major indexes have been smacked down badly so far in 2022. A number of attempted rallies raised hopes that the pain would end. In fact, the IBD market outlook switched to “confirmed uptrend” four times amid rally attempts, but each time they petered out.

FactSet Research Systems(FDS Quick QuoteFDS) Downgraded: 02/17/24

Even with the index at all-time highs, analysts still see more gains ahead over the next 12 months. The consensus S&P 500 price target of 5,280 suggests about an 8% upside from current levels. The average yield spread was -1.3% in January 2024, but that still represents the lowest reading since August 1981, when the average yield spread was -1.43%.

Now, with all that said, we did hike our inflation forecast just a bit compared to where we were a month ago. And that’s driven by, first, oil prices, where I will note I haven’t updated this chart for the market movement of the last couple of days. We have seen an oil price correction in the last several days. Nevertheless, I wouldn’t be surprised to see oil prices head back up again in the fourth quarter of this year, given these production cuts from Saudi Arabia and Russia that we’ve seen that have helped to drive up prices.

Technological advancement will keep aiding cross-selling opportunities. Pipeline construction in Canada has failed to keep pace with the rising domestic oil, forcing producers like Suncor to sell their products at a discounted rate. We cover more than 1,000 of the most widely followed stocks in our Equity Research Reports. Each report features independent research from our analysts and provides in-depth analysis on a company, its fundamentals and its growth prospects.

Top-Performing Stocks of 2023

In fact, if mortgage rates remain where they’re at right now at very high levels, I would say we’re in for another leg of a housing downturn, which will be quite severe. And our long-term 10-year Treasury yield projection is 2.75%, and we expect to get there by 2025, as you can see, we’ll actually perhaps be a little bit under it. That’s driven largely by our assessment of long-run trends in U.S. interest rates.

So, again, with as much as growth has moved back down, we do think that now is a good time to move back to that market weight. And then, by capitalization, large-cap stocks still remain fully valued, trading slightly above the market at this point in time. And the mid-cap and the small-cap are still more attractive, in our view. As 2024 gets underway, what’s the outlook for the stock and bond markets?

U.S. Economic Outlook

The S&P 500’s current rally bodes well for the month of February and for the rest of 2024. Investors are optimistic the S&P 500 can continue its recent momentum in February, a month that has historically been one of the worst of the year for the market. Unpredictable domestic policy out of Beijing was a frequently cited headache, while the likes of Bank of America flag the “extreme downside risk” of a flare up over Taiwan. As 2022 begins, the overriding message from almost 50 financial institutions across Wall Street and beyond is that conditions still look good, but the rip-roaring rallies powered by the reopening are history. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. More bond ETFs, fewer passive ETFs, and what else to expect in the new year.

And we have seen interest rates rise; the 10-year is now up to about 4.80%. The 30 basis points from 4.50% up to 4.80% have occurred really just in the past week and a half, and we’ve seen a lot of those other interest rates rise since the Fed meeting on Sept. 20. I would eightcap review just highlight here that there really hadn’t been that big of a change in the percentage of the number of 4- and 5-star stocks at the end of this past quarter. Forty-six percent of the market is rated 4 or 5 stars, meaning that we think that they are undervalued.

Friday’s Market Performance

Investors may be hoping that’s the case, which is one reason to justify the big stock market surge Thursday. Looking at the stock market forecast for the next six months, Cronk believes the S&P is most likely to rebound somewhat and end the year around the 4,200 to 4,400 level, or up about 13.5%-19% on June 17’s levels. This would leave it well below the all-time high of 4,818 reached in January. He also says another thing investors can do in a bear market is to build a robust watchlist of stocks that are displaying relative strength. These are the stocks that aren’t falling as much as the overall stock market or are even eking out a few gains. The watchlist can prepare you to snap up new leaders when the next market uptrend begins.

Also, the second year of President Joe Biden’s term comes with worrying historical baggage. Since the Second World War, year two of a presidency brought below-average stock market returns of around 5%, Stovall says. This compares to an average gain of 9.2% in all years since then. But the stock market forecast for the next six months holds glimmers of hope. While the U.S. economy is showing signs of weakness and the global economic and geopolitical picture is gloomy, stocks have a chance of staging a stunning fightback.

Base cases are as identified by Bloomberg, and editorial judgment has been used throughout. Second, even if the economy suffers a recession, investors who sell wouldn’t know when to buy again. The S&P 500 usually rebounds about four or five months before a recession ends, and the index has historically returned a median of 30% between its bottom and the end of a recession, according to JPMorgan Chase. Investors who attempt to time the market will probably miss some of those gains.