Plus 5 New Strong Buys for Today Stocks Down After Fed Decision, Focus Turns To Friday's Employment Report
[Kevin Matras - EVP - Photo]
Profit from the Pros By Kevin Matras
Executive Vice President Stocks Down After Fed Decision, Focus Turns To Friday's Employment Report [Stocks Down After Fed Decision, Focus Turns To Friday's Employment Report]Image: Bigstock Stocks closed sharply lower yesterday after the Fed's FOMC announcement. The Fed raised rates by 75 basis points as expected. What was new was their acknowledgement of the lag that their intertest rate hikes will have on the economy by saying they will "take into account...the lags with which monetary policy affects economic activity." Stocks rallied on the new language as traders interpreted that as meaning they will eventually slow the pace (or stop altogether) to give the rate hikes a chance to work, thus lessening the chance the Fed crashes the economy. But during Chairman Powell's press conference, he reiterated that the rate hikes will continue and that there's still "a ways to go." Stocks turned lower upon hearing that. Nonetheless, he did say "at some point...it will be prudent to slow the pace of increases." And he hinted that could come as early as next month's FOMC meeting. No surprise there as many had already been forecasting a slowdown to 50 basis points in December, which would put the Fed Funds rate effectively at their earlier forecasted target of 4.4% by year's end. Lastly, Mr. Powell suggested that, based on incoming data, interest rates may need to go "higher than previously expected." The Fed previously forecast the terminal rate at 4.6% in 2023. But now, some are expecting that to potentially reach 5% before they stop raising. My takeaway from yesterday – there was something for both the hawks and the doves. On the one hand, rates are likely to slow at the next meeting (December) or the following meeting (February). And at present, there's over a 55% chance they 'only' raise 50 bps in December. On the other hand, they suggested the terminal rate (the rate at which they hold rates steady at for a while), could climb above their previously forecasted 4.6% (maybe rise to 5%?). To me, I didn't hear anything overly negative. They acknowledge inflation is still too high. And they will keep up the fight. But realize they are going to have to slow down pretty soon and see how their monetary policy is working and go from there. At last month's FOMC announcement, stocks traded higher intraday and then plunged by the close. They then proceeded to make new lows within a few short weeks. They traded higher intraday yesterday, then plunged by the close. But that's where I'm expecting the similarities to end. If anything, the Fed's new language (lag) was a positive for the market. And we currently have strong earnings, fairly positive economic numbers (way better than previously feared), and the seasonality couldn't be better (Q4 is the best quarter for stocks, especially in midterm years; Q1 following a midterm year is even better than Q4; and year three of the Presidential Cycle (that's 2023) is typically the strongest of all four years for the market. And we are right at the beginning of this period of strength. So I'm expecting stocks to regroup and head back up. If you'd like to read more about the bullish tendencies for stocks after midterms, and how high they historically go, be sure to read our latest commentary... [Utilize the Midterms to Kickstart Your Long-Term Portfolio]( Best, [Kevin Matras - Signature] Kevin Matras
Executive Vice President, Zacks Investment Research [Major Buying Opportunity: 2022 Midterm Elections]( The upcoming midterms could mark the beginning of a new bullish trend in the market. According to historical data, the next few months may be the most profitable we've seen in years. In Zacks' 2022 Midterm Election Stock Report, you'll discover 5 stocks set to soar, no matter which party wins. Before previous elections, Zacks reports recommended stocks that climbed +71%, +83%, even +185% in the following months. This year's picks could be just as lucrative, if not more. [See Zacks Midterm Election Stocks Now >>]( Most Popular Articles from Zacks.com [Combat Rising Rates With These 3 Top-Ranked Insurance Stocks]( Insurers can see their profit margins expand during higher interest rate environments. [Read More »]( [2 Long-Term Bets on the Semi Equipment Industry]( Despite near term supply chain constraints and raw material cost inflation, these stocks look solid for holding. [Read More »]( [Buy 3 of the Best Stocks for Earnings Acceleration]( Each of these stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has recently seen earnings accelerate. [Read More »]( [5 Hot Earnings Charts]( There's actually good earnings news out there with some industries. Here are a few of them. [Read More »]( [Top-Ranked ETFs That Beat the Market in October]( We highlight five ETFs from different industries that outperformed last month. [Read More »]( [Final Reminder: Could This Be the Next Tesla?]( Zacks Aggressive Growth expert Brian Bolan has pinpointed a tiny company from America's heartland that's gearing for a monster ride. It's ramping up production of an affordable, "working man's" rival to Tesla at exactly the right time. Those who got in early on Tesla gained up to +26,600%. That type of gain may be difficult to reach, but Brian's under $5/share industry disrupter could easily ride soaring gas prices and desire for energy independence to triple and quadruple-digit gains. Experts predict the EV market to reach $1 trillion in 5 years. Don't wait to get aboard. [See This Stock Now >>]( [Bull of the Day: GasLog Partners (GLOP)]( This energy stock keeps winning and just made fresh 2022 highs. [Read More »]( [New Zacks Strong Buys for November 3rd]( Here are 5 stocks added to the Zacks Rank #1 (Strong Buy) List today. [Read More »]( More Zacks Resources Mobile App
Download our app for convenient on-the-go access to even moreâdaily and weekly newsletters published by Zacks experts, proprietary research and tools, and Portfolio Tracker on Zacks.com. [Download our Zacks App for Apple iOS]( [Download our Zacks App for Android]( Zacks Members' Success Stories
Visit [Success Stories]( to hear how Zacks research, tools and portfolios help our members outperform the market. Get all of our market insights and much more when you connect with us. [Visit Zacks on Facebook]( [Follow Zacks on Twitter]( [See Zacks videos on YouTube]( [Join Zacks on LinkedIn]( [Read Zacks Commentary on StockTwits]( This free resource is being sent by [Zacks.com](. We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms of Service". [www.zacks.com/terms_of_service]( Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research is not a licensed securities dealer, broker or US investment adviser or investment bank. The Zacks #1 Rank Performance covers the period beginning on January 1, 1988 through September 12, 2022. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank #1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit [( for information about the performance numbers displayed above. Zacks Emails
If you would prefer to not receive future profit-producing emails from [Zacks.com]( the primary purpose of which is the commercial advertisement or promotion of a commercial product or service, then please [click here]( and confirm your request. If you have trouble with the unsubscribe link, please email support@zacks.com. Zacks Investment Research
10 S. Riverside Plaza, Suite 1600
Chicago, IL 60606