U.S. equities are once again under pressure. The Dow Jones Industrial Average moved below its 50-day moving average on Monday, as investors worried about rising odds of “Brexit” in Europe and an upcoming Federal Reserve policy meeting on Wednesday.
While no rate hike is expected until July at the earliest, a post-announcement press conference, updated economic projections and revised “dot plot” of rate hike expectations provides plenty of opportunity for a negative surprise.
Any indication that the Fed is moving toward a more aggressive path of rate hikes — which would be two or three moves this year versus the one or none expected by the market — would likely deepen recent equity weakness.
If so, keep an eye on these three stocks which have already been hit hard by sellers in recent days.
Fed Stocks to Watch: Bank of America Corp (BAC)
Bank of America Corp (BAC) shares have fallen down and out of its post-February uptrend as long-term Treasury bond yields have collapsed in response to rising Brexit concerns and fears the Fed could tighten policy prematurely.
The result has been a drop in the difference between short-term and long-term interest rates, the net interest margins banks depend on for profitability.
The company will next report results on July 18 before the bell. Analysts are looking for earnings of 37 cents per share on revenues of $21.1 billion.
Fed Stocks to Watch: Ford Motor Company (F)
Ford Motor Company (F) shares have dropped out of their tight two-month consolidation range and look ready for a test of the early April low near $12.25.
This continues a sideways pattern in the automaker going all the way back to the summer of 2013 as, despite red-hot auto sales numbers, doubts are growing about the health of the auto industry amid evidence of credit quality decline and a coming flood of off-lease vehicles into the second-hand market.
The company will next report results on July 28 before the bell. Analysts are looking for earnings of 61 cents per share on revenues of $36 billion. Edge Pro subscribers are enjoying a 50% gain in their July $13 F puts.
Fed Stocks to Watch: Goldman Sachs Group Inc (GS)
Golden Sachs Group Inc (GS) like other bank stocks, are getting hit on net interest margin concerns stemming from the safe haven inflows into Treasury bonds (and other government bonds worldwide). Shares have already dropped back to its mid-February levels with critical support not far away at $140.
The company will next report results on July 19 before the bell. Analysts are looking for earnings of $3.22 per share on revenues of $7.7 billion. Edge Pro subscribers are enjoying a 48% gain in their July $150 GS puts.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
