The Federal Reserve could drag down the market
When Federal Reserve Chairman Jerome Powell speaks at his post-decision press conferences, history reveals, stocks tend to decline somewhat.
This time, the Fed chairman faces one of the more difficult tightrope walks of his career, as markets expect him to address the bubbling inflationary pressures that he previously described as transitory. At the same time, many believe Powell will shock the market if he indicates that the Fed will begin to taper its ultra-easy monetary policy. During Powell’s delicate dance Wednesday afternoon, investors will parse through minute shifts in sentiment.
The Fed’s policy statement and forecasts will be released at 2 p.m. ET Wednesday, and Powell will speak at 2:30 p.m.
Billionaire investor Paul Tudor Jones told analysts on Monday that this is the most important news conference in Powell’s career, and that if he is not careful, it could lead to another taper tantrum, causing a stock market correction.
Cramer echoed that sentiment on Wednesday, saying Powell could cause a stock market sell-off because reporters will likely grill him on inflation.
“I believe that a lot of the heckling, which I consider press questions to be, will be about oil and inflation, and if Powell breaks his resolve and says, ‘Yes, I’m looking at oil,’ the traders will come in at 2:43 and smash the market.” Cramer stated. “The press has to put pressure on Powell. When Powell slips up, the market plummets dramatically.”
To be sure, the market has performed better during Powell’s briefings during the coronavirus pandemic. According to Bespoke, the average for the past year’s Fed days has seen the S&P 500 hit its day’s highs after the news conference begins, and while there has been a sharp reversal off those highs, by the end of the day.
Citi downgrades Voya
This year, Voya Financial has fallen behind other financial stocks, and Citi said it was not clear how it could catch up.
Voya Financial has lagged behind other financial stocks this year, and Citi believes it will be difficult for it to catch up.
Investment and insurance stocks have increased by 8.8 percent year to date, while the broader market and financial stocks have underperformed. The stock market has been flat over the last three months, while the SPDR Select Financial Sector ETF has increased by 8%.
Suneet Kamath, an analyst, downgraded the stock to neutral from buy and told customers on Thursday that there are no catalysts and “low fruit” that will increase shares.
Jack In The Box stock could potentially bit McDonald’s
According to RBC Capital Markets, Jack In The Box could significantly expand its footprint and increase its stock.
Analyst Christopher Carril initiated stock coverage with an over-performing rating, noting on Thursday that the company’s shares appear undervalued because of their potential for expansion throughout the country.
“We see JACK as attractively valued… especially given that the company is poised to reaccelerate net new restaurant growth for the first time in years,” according to the note.
According to RBC, Jack In The Box’s footprint is heavily concentrated in Texas and California, leaving plenty of room for expansion elsewhere in the country.
“We identified nearly 2,900 potential new JACK locations across the US, which, when combined with the brand’s current 2,200 restaurant footprint, points to significant unit growth upside and validates our view on the brand’s long-term growth potential,” according to the note.
The company has scheduled an investor day event for June 29, which RBC believes will provide a better look at the potential expansion.
The firm set a price target of $140 per share for Jack In The Box, which is more than 18% higher than the stock’s closing price on Wednesday.