Best stocks to buy on May 26th, 2021
Gamestop and AMC reported a late-afternoon surge yesterday pumped by the Reddit community, while in the Dow, some of the winners at closure were Walt Disney, United Health Group, and Home Depot. Up to about half a percent, the SMPK Schiller home price index reflects a robust house demand with people still willing to pay the prices that are going up now 13.2% over the last year. Among the others, Home Depot is benefiting from it. Another interesting positive trend is in the airline sector, with Boeing and other airlines like United approaching the same levels that we saw in 2019.
The Bitcoin price is still pretty volatile, going up and down by 8% in the last few hours, with lots of crypto stocks still in negative territory over the last month or 2. Best long terms stocks are to be found in the semiconductor space.
The market on May 24th, 2021
At the closing bell yesterday, the market trade was down, with the S&P500 and the NASDAQ all in negative territory. NASDAQ just below the flatline, and the S&P500 closed at -0.21%, the DOW losing 82 points. Big Tech had a lot to do, although some of those Fang and the cruise line helped investor sentiments, providing some broader markets support. But just in terms of the most stocks, there have been losses for all three main indexes.
A big impact is given by the debate whether the fed needed to tighten sooner than later inflation. People are wondering whether the Fed has been a little bit too patient on this and should potentially be acting sooner.
Some people think this correction is only transitory, with interest rates come back down again in the 3rd and 4th quarter, but on the other side, some people think this is permanent. The market is pushing the FED to do something, although they have made clear that they will not do anything unless they see the economy getting back down to the levels that were pre-COVID down to 3%, or maybe 4%. At the same time, inflation should go above the 2.5% target. However, they don’t think this will happen until 2022 at the earliest.
On the bond market, we saw the 10-year yield pulling back just a bit yesterday. We haven’t seen a lot of action, or maybe it’s been a little more muted than what we would expect when we talk about this inflation over the last several weeks. There has been a massive sell-off in the 1st quarter, one of the worst quarters for bond performance in literally 30 years. Analysts think we have now reached a bit of a digestion period. The bond market has been going sideways, ranging from 155 to 170 in the last nine weeks straight, and we could continue to see that over the next couple of weeks. But once we get deeper into June, we will be able to see some data, and perhaps even an increase in the jobs numbers. Indeed, the previous data was weaker than expected, with the market not moving too much. The inflation number came hotter than expected, and the market looks forward this coming Friday to get more data that perhaps will help push rates higher.
We haven’t broken out of that resistance on the ten-year it – I mean 1.6917 – but there are high chances right now to break through that and go higher. That is because that’s what Powell wants. He will not do anything until he gets inflation up to that 2.5% rate for over six months. This is a fight against the FED, considering that inflation will get lower than that. They will do anything possible to stimulate it, and when the economy is overheating – potentially 6% growth in the first quarter and a 10% growth in the 2nd quarter – we’ve got a lot of momentum here. It is expected to get stimulus in the coming months, both on the monetary and fiscal sides, with continued growth expected, leading to higher inflation rates, hence higher rates.