Wall Street is on pins and needles ahead of the Federal Open Market Committee (FOMC) March meeting this week. While the FOMC meetings are typically closely watched, the March FOMC meeting could be especially critical for future market performance.
Many strategists are forecasting key interest rate cuts later this year, but that seems very premature to me right now. Instead, I expect the Fed to raise key interest rates by 25 basis points on Wednesday. Personally, I think it’s the Fed’s statement on Wednesday afternoon that will be vital.
Here’s the reality: We need the Fed to signal that it will “pause” its tightening policy.
The truth is that as the Fed raised key interest rates to push inflation back down, it inverted the yield curve (it’s been inverted since July). This is when the two-year Treasury yield curve is above the 10-year Treasury yield curve. The Fed is responsible for protecting the integrity of the U.S. banks, and an inverted yield curve is lethal for the banks. An inverted yield curve hurts the banks’ profitability.
So, the Fed must un-invert the yield curve and restore a bit of stability in the banking sector. The first step towards that is a dovish FOMC statement on Wednesday that alludes to an upcoming pause in raising key interest rates.
If the Fed does release a dovish FOMC statement tomorrow, then a massive stock market rally could be in the cards.
However, we can’t expect every stock to outperform. So, in today’s Market 360, I’ll reveal the stocks that are more likely to underperform the broader market, due to their weak fundamentals. I’ll also share the best stocks to invest in ahead of the next big market run…
This Week’s Ratings Changes
After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for 121 big blue chips. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and act accordingly.
I’ve included the first 10 stocks that were downgraded from “Hold” (C-rating) to a “Sell” (D-rating in the chart below. For the full list of 121 stocks – including their Fundamental and Quantitative Grades – click here.
|Ticker||Company Name||Total Grade|
|AIG||American International Group, Inc.||D|
|BBDO||Banco Bradesco S.A. Sponsored ADR||D|
|BSBR||Banco Santander (Brasil) S.A. Sponsored ADR||D|
|FOXA||Fox Corporation Class A||D|
|HBAN||Huntington Bancshares Incorporated||D|
|J||Jacobs Solutions Inc.||D|
|JBHT||J.B. Hunt Transport Services, Inc.||D|
|JD||JD.com, Inc. Sponsored ADR Class A||D|
The fact of the matter is it’s important to invest in companies that can maintain robust earnings and sales growth and are also backed by persistent buying pressure – and the companies above simply aren’t cutting it.
Keep in mind that we’re in a narrower market, where only the top 15% of the stocks in Portfolio Grader have emerged as market leaders.
So, it’s important to invest in fundamentally superior stocks, as these are the stocks well-positioned to prosper – no matter which way the market turns next.
If you’re not sure where to look, then consider my Growth Investor service. We’ve taken steps to align our Buy Lists to prosper in the current environment, as we’ve loaded up on companies with accelerating earnings and sales momentum.
If you become a Growth Investor member, you’ll have access to my two Buy Lists: High-Growth Investments and Elite Dividend Payers. I also include a Top Stocks list, which is a select list of stocks from my Buy Lists that are backed by persistent institutional buying pressure and stunning fundamentals.
To join me at Growth Investor today – and gain full access to my Buy Lists – click here.
And stay tuned! Right now I see TWO massive economic events on the horizon – events that the mainstream media is ignoring. I’ll have full details for you soon, so keep a close eye on your inbox.
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