6 hours ago
Indicators confirm to BOFA that the US is in recession and cash beats stocks
Quantitative market indicators observed at Bank of America by a team led by cross-asset and quant strategist Alex McDonough and equity and quant strategist Savita Subramanian confirm that the US economy fell “deep” into recession (a late economic cycle phase) in February for the second straight month, a report said on Tuesday.
BOFA noted that going back to 1990, a similar situation occurred seven times, with recessions lasting an average of 12 months (but between six months in 1995–1996 and 19 months during the global financial crisis).
What’s more, “Cash is now the option,” BofA said. “We view cash as more attractive than equities, given our expectation for S&P 500 total returns of only 2% to 3% this year.” compared to the cash yield of 5%. short-term Treasury bills and the Bank’s economists “expect a terminal rate of 5.25%-5.5%, even after recent developments.”
The team wrote that the best equity investment strategies revolve around those that are based on the companies’ cash flows. Those strategies, emphasizing enterprise value to free cash flow or the value to free cash flow ratio, “underperformed the index in past recessions, particularly outside the zero interest rate policy (ZIRP) era, when cash was scarce.” Value was too low. These factors are worth less. Active manager and cheap versus history.”
BOFA’s view is that stocks offering free cash flow and dividends represent a “bird in the hand,” while high P/E, growth stocks are “dream buy” ideas. BOFA said, unfortunately for those counting on a revival of leaders from the past, “long equity duration stocks (‘dream buy’ growth stocks that are most sensitive to funding costs) may have more room to falter. Might.”
Scott Snyper
7 hours ago
Lennar, First Republic in after-hours running stocks
Lennar – The homebuilding stock rose nearly 3% in extended trading. Lennar beat analysts’ earnings and revenue expectations for the most recent quarter, according to Refinitiv. The company posted earnings of $2.06 per share on revenue of $6.49 billion.
First Republic – Shares of the regional bank soared 8.9% once again after the bell. Other bank names Western Alliance and KeyCorp also advanced with gains of 5% and 3%, respectively.
Read the full list of stocks trending after hours here.
-Samantha Subin
7 hours ago
3M — lowest in 10 years — among 15 new S&P 500 52-week lows on Tuesday
Among the 15 stocks in the S&P 500 that hit 52-week lows on Tuesday was 3M, which fell to its lowest level since February 2013. Once known as Minnesota Mining & Manufacturing, 3M is the only stock in the 15 that’s in it, too. Dow Jones Industrial Average.
- Dish Network (DISH), lowest since 2009
- Hasbro (HAS), lowest since March 2020
- VF Corp. (VFC), lowest since 2011
- Hormel (HRL), lowest since 2019
- Devon Energy (DVN), lowest since January 2022
- Centene (CNC), lowest since October 2021
- CVS Health (CVS), lowest since April 2021
- Southwest (LUV), lowest since May 2020
- 3M (MMM), lowest since 2013
- General Digital (GEN), lowest since March 2020
- CF Industries (CF), lowest since February 2022
- WestRock (WRK), lowest since August 2020
- Advance Auto Parts (AAP), lowest since May 2020
- Organon (OGN) hits lowest since Merck spin-off in June 2021
- Boston Properties (BXP), lowest since 2009
Three stocks in the S&P 500 touched new 52-week highs on Tuesday:
- Arista Networks (ANET), all-time high for 2014 IPO
- Cadence Design Systems (CDNS), the highest ever since ECAD went public in 1987
- GE Healthcare Technologies (GEHC), the biggest return ever for a GE spin-off in December 2022
– Scott Snyper, Christopher Hayes
7 hours ago