Wall Street is clearly in a bad mood following the long holiday weekend! The S&P 500, Dow and NASDAQ all slipped lower today, with the Dow losing more than 300 points in in the early afternoon before bouncing back slightly into the close.

The reality is investors are not happy with Goldman Sachs’ (GS) mixed quarterly earnings results, the weak numbers from the New York Federal Reserve’s Empire State Manufacturing Survey for December (which showed the lowest level of activity since May 2020), and hawkish comments from Federal Reserve Governor Christopher Waller. He said in a speech that he didn’t see the need for the Fed to cut rates right away.

All of this, combined with a jump in the 10-year Treasury yield, sent stocks lower.

Unfortunately for investors, the stock market was full of ups and downs last week, too. Between Monday and Friday, the S&P 500 rose 0.4%, the NASDAQ climbed 0.9% and the Dow slipped 0.2%.

However, that shouldn’t come as a shock given the mixed economic data Wall Street has received…

• The latest unemployment report showed 216,000 jobs were created in December, which was higher than estimates for 170,000 jobs. However, October’s and November’s payroll reports were revised lower by 71,000 jobs. The unemployment rate remained steady at 3.7% despite 845,000 workers disappearing from the workforce. The labor force participation rate dropped by 0.3% to 62.5%.
• The Institute of Supply Management (ISM) revealed that its manufacturing indexrose to 47.4 in December, up from 46.7 in November. Remember, any reading below 50 signals a contraction, so the manufacturing sector has been in a recession for the past 14 months.
• ISM’s non-manufacturing service indexis also dangerously close to falling into a recession. The index plunged to 50.3 in December, compared to 52.7 in November. This was a big shock since economists were expecting a reading of 52.6.
• The Consumer Price Index(CPI) shocked a bit last week, with consumer prices rising 0.3% in December. Prices are now up 3.4% in the past 12 months, compared to 3.1% in November. Economists expected a 0.2% month-to-month gain and a 3.2% annual rise. Core CPI, which excludes food and energy, rose 0.3% month-over-month but slipped to an annual rate of 3.9%. Estimates called for a 3.8% annual increase.
• The Producer Price Index(PPI) revealed that deflation has spread to the U.S. Prices declined 0.1% in December, compared to economist expectations for a gain of 0.1%. On a yearly basis, producer prices were up 1%. This is the third-straight monthly decline for the PPI, which is significant because it means we’re seeing deflation at the wholesale level.

Nonetheless, we need more inflation data to come in before the Fed finally relents and begins cutting key interest rates. So, you can bet Wall Street will be following this week’s December retail sales report – scheduled to be released tomorrow morning – to see how inflation is impacting consumer spending.

Economists anticipate retail sales to rise 0.4% in December, up from 0.3% in November. Excluding auto sales, retail sales are expected to increase 0.2% in December, compared to 0.2% in November.

Now, if the retail sales are weak, the Fed might hurry up and cut interest rates because the U.S. economy is struggling right now. If retail sales are strong, it might cause the Fed to postpone any rate cuts, which Wall Street will not be happy with.

The bottom line: Tomorrow’s retail sales report will be a huge one for the market.

I should also add that the fourth-quarter earnings season will also be running behind the scenes. All of this to say, there is a lot for Wall Street to watch this week and a lot that could impact the broader market direction.

With that in mind, the best defense is a strong offense of fundamentally superior stocks, which is why you need to focus on companies with superior fundamentals, i.e., strong earnings and sales growth, that are also experiencing persistent institutional buying pressure. With the fourth-quarter earnings season now upon us, it’s especially important you position your portfolio properly now with stocks poised to prosper as investors turn their attention to earnings.

So, in today’s Market 360, I’ll reveal 10 stocks that do not boast superior fundamentals that you should avoid. And then I’ll share where you can find the stocks that truly represent the crème de la crème of the stock market.

This Week’s Ratings Changes

After taking a closer look at the latest institutional buying pressure and each company’s financial health, I decided to revise my Portfolio Grader for 72 big blue chips. Of these 72 stocks, 14 were downgraded from a B-rating (Buy) to a C-rating (Hold), and 12 stocks were downgraded from a C-rating to a D-rating (Sell).

I’ve listed the first 10 stocks to sell below, but you can find the full list – including the stocks’ Fundamental and Quantitative Grades – here.

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 adjust accordingly.

If you’re not sure where to find fundamentally superior stocks, then consider my Growth Investor service. In this particular service, I have two Buy Lists: High-Growth Investments and Elite Dividend Payers. And both of these Growth Investor Buy Lists are chock-full of fundamentally superior stocks.

My Growth Investor stocks are currently characterized by 171.7% average forecasted earnings growth and continue to benefit from positive analyst revisions. So, wave-after-wave of positive earnings surprises should drive my Growth Investor stocks higher when the fourth-quarter earnings season kicks off in late January.

So, if you want to make sure your portfolio is filled with fundamentally superior stocks, then join me at Growth Investor today. You’ll receive instant access to all my Buy List stocks, as well as all my Growth Investor Monthly Issues, Weekly Updates, Special Market Podcasts – and much more.

Click here to sign up for Growth Investor now.

(Already a Growth Investor subscriber? Go here to log in to the members-only website.)

Sincerely,

Louis Navellier

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Halliburton Company (HAL)