6 hours ago
Indicators confirm to BofA that the US is in the downturn and cash is beating stocks
Quantitative market indicators, monitored at Bank of America by a team led by cross-asset and quant strategist Alex Makedon and equities and quant strategist Savita Subramanian, confirm that the US economy is looking “deeper” in A downturn (from late in the economic cycle) fell for the second straight month in February, a report said on Tuesday.
Dating back to 1990, similar conditions prevailed seven times, with downturns lasting an average of 12 months (but varying between 6 months in 1995 and 1996 and 19 months during the global financial crisis), BofA said.
Additionally, “Cash IS the alternative now,” BofA said, adding, “We think cash is more attractive than stocks as we expect only a 2% to 3% total return for the S&P 500 this year,” compared to short-term Treasury bills with a cash yield of 5% and the bank’s economists “still expect a terminal yield of 5.25% to 5.5% even after the latest developments”.
The best stock investment strategies revolve around those based on companies’ cash flow, the team wrote. These strategies, which emphasize the ratio of free cash flow to enterprise value or price to free cash flow, “have outperformed the index in previous downturns, particularly outside the zero interest rate policy (ZIRP) era when cash had little value. These factors remain undervalued active managers and favorable vs history.”
The BofA idea is that stocks that offer free cash flow and dividends represent a “bird in the hand,” while high P/E growth stocks are “buy-the-dream” ideas. Unfortunately for those expecting a rebound from past leaders, “stocks with long equity duration (growth stocks that are most sensitive to funding costs) may have more leeway,” BofA said.
– Scott Snapper
6 hours ago
Lennar, First Republic among stocks moving after hours
Lennar — The homebuilder stock was up about 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 sales of $6.49 billion.
First Republic – Shares in the regional bank stocks were on the move again after the bell, most recently up 8.9%. Other bank names, Western Alliance and KeyCorp, were also up, gaining about 5% and 3%, respectively.
Read the full list of stocks moving after hours here.
— Samantha Subin
7 hours ago
3M – lowest in 10 years – below 15 new 52-week lows for S&P 500 on Tuesday
Among 15 stocks in the S&P 500 to make fresh 52-week lows on Tuesday was 3M, which fell to its lowest level since February 2013. Once known as Minnesota Mining and Manufacturing, 3M is the only stock among the 15 that also makes up the Dow Jones Industrial Average.
- Dish Network (DISH), lowest since 2009
- Hasbro (HAS), lowest since March 2020
- VF Corp. (VFC), lowest level since 2011
- Hormel (HRL), lowest since 2019
- Devon Energy (DVN), lowest since January 2022
- Centene (CNC), lowest since Oct 2021
- CVS Health (CVS), lowest since April 2021
- Southwest (LUV), lowest since May 2020
- 3M (MMM), lowest level since 2013
- Gen Digital (GEN), lowest since March 2020
- CF Industries (CF), lowest since Feb 2022
- WestRock (WRK), lowest since August 2020
- Advance Auto Parts (AAP), lowest since May 2020
- Organon (OGN), lowest since spin-off from Merck in June 2021
- Boston Properties (BXP), lowest since 2009
Three stocks in the S&P 500 hit new 52-week highs on Tuesday:
- Arista Networks (ANET), all-time high back to 2014 IPO
- Cadence Design Systems (CDNS), all-time high since ECAD went public in 1987
- GE Healthcare Technologies (GEHC), all-time high back to GE spinoff in December 2022
— Scott Schnipper, Christopher Hayes
7 hours ago