A temporary or a long pullback for tech stocks?

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The market bounced back slightly yesterday after a couple of days of losses after Federal Reserve Chair Jerome Powell said that the central bank is likely to cut interest rates this year — but not too soon. Most importantly, Powell believes the rates will not go higher from now on. - “We believe that our policy rate is likely at its peak for this tightening cycle,” Powell said. “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.” Fed Chair Jerome Powell (Photo: Bloomberg) But he resisted to expand on his thoughts when questioned by the House Financial Services Committee yesterday. Why? He wants to see more data before making any further conclusions. What’s more, Powell warned against cutting rates too soon because it could accelerate inflation. But he can’t just leave rates unchanged. He said that leaving rates elevated too long can cause damage to economic growth. All in all, what Powell said was enough for Wall Street. There was a brief anxiety about a potential rate hike, but Powell poured ice water on it. So, there was no surprises from Powell which was positive for the market. - “No news is good news from Powell,” said David Russell, global head of market strategy at online investing platform TradeStation. “He confirmed that the bias from here is likely toward lower rates and emphasized potential risks from not cutting.” CEOs’ confidence in the economy soars: The Business Roundtable’s CEO Economic Outlook index (a gauge measuring expectations for sales, investment and employment over the next six months) skyrocketed by 11 points to reach 85. It was a big jump from last year’s sentiment of about 70. Any reading above 50 indicate expectations for economic expansion in the next six months. 77% of CEOs expect sales growth over the next six months — up from 10 percent in the previous quarter. Upcoming catalysts: Initial jobless claims will be out today, while nonfarm payrolls and unemployment are due on Friday. These data will offer some clues on whether the economy is at risk of a slowdown. With the earnings season wrapping out, economic data will be in the spotlight from now on. Top Growth Stock To Buy Right Now Want The Safest ~4% Yield You Can Find In The Stock Market? Today’s Stock Pick: International Business Machines Corporation (IBM) Want a safe bet on the megatrend of artificial intelligence? Then IBM is your stock. Wait a minute?! IBM was founded in 1911, so we’re talking about a century-old company as a leader in A.I.? Yep, you read it right. IBM World Headquarters (Photo: KPF) IBM has been in the A.I. game for decades. Its supercomputer Deep Blue famously defeated chess champion Garry Kasparov in 1997. So, the company has a deep history of A.I. innovations that are ahead of many other companies. Watson is a popular platform to help businesses predict future occurrences, optimize tasks, and aid users with time management. Its customers include finance, healthcare and supply chain. Believe it or not, Watson already attracted 13 of the 14 top systems integrators and 70% of global banking institutions. IDC ranked IBM the number one leader for AI software platforms with a whopping ~14% market share in 2020 – or a 47% y-o-y growth. Impressive, right? Since A.I. is a megatrend, IBM is well-positioned to remain an 800-pound gorilla for another decade or so. Here’s the main thesis – IBM offers a dividend yield of 3.38%. Will the dividend yield go down? Extremely unlikely. The company had boosted its dividends for 27 straight years – excluding unusual increases during the pandemic. The current dividend is back to its regular trend. This means that your yield of a little under 4% is virtually locked in, and it will only continue to gain over the years. IBM’s TTM dividend payout since 2004 (Source: MacroTrends) A good value: Next year, analysts project a net income of $10 per share. It would represent about 19 times its current stock price of $196, making IBM a reasonable AI stock to own. (Have you seen Nvidia’s valuation?!) You would not overpay for its big dividend yield. Other businesses: IBM also offers products and services in massive markets, like hybrid cloud, digital transformation, and infrastructure. They will only continue to add cushion to IBM’s cash flow to pay out fat dividends. Bottom line: Artificial intelligence and cloud computing are the future, and IBM has its foothold in these two industries. So, it won’t “miss the turn” and fade into irrelevance. Kodak, anybody? All in all, IBM offers perhaps the safest ~5% dividend yield you can ever find anywhere in the stock market.   [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](     © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](