Another weak manufacturing report graced the financial markets this week, adding continued opposition to the Federal Open Market Committee’s desire to raise interest rates. Of course, an interest rate increase is inevitable, if only because there’s so little room for rates to decrease, while the sky’s the limit on potential increases.
Bloomberg commented, “increased auto output in response to the best sales in a decade remains a bright spot for manufacturing.” And on that rosy note, make sure to read about today’s featured stock in the Growth & Income Portfolio.
I’m not of the opinion that major stock portfolio changes need to be made when interest rates begin to rise. Economic and political goings-on are factored into Wall Street analysts’ earnings estimates. Those analysts consistently provide valuable information to me. I don’t need to second-guess their data. If interest-rate changes are going to harm a company’s outlook, I’ll see it in the earnings estimates, and change my opinion of its stock accordingly. As of right now, I see no economic warning signs to warrant concern.
Industry groups take turns rising and falling in the stock market. Sometimes they do so because they’re going through multi-year cycles in which their profits excel or stagnate. Other times, major news or M&A activity coming from a well-known company will affect stock prices throughout its sector.
Software stocks and travel and leisure stocks continue to show strength in the market. Read about some excellent buy-rated stocks from those sectors in today’s issue.
One of the Growth Portfolio’s travel and leisure stocks has risen so much since joining the portfolio that I’m changing the rating from buy to hold. It’s up 15% so far, and still rising.
Recently, we saw Wal-Mart’s poor earnings outlook affect the stock prices of many discount retailers. We’re also seeing some weakness in housing and construction materials stocks and healthcare stocks. However, there haven’t been any earnings or valuation problems with these stocks. You can read more about these sectors in today’s issue.
