While the central bank has been anything but coy about its hawkish intentions, investors seem convinced that the aggressive rate hikes are putting the economy on a path to recession. As such, the purse strings are tightening and the Dow Jones Industrial Average (DJI), S&P 500 Index (SPX) and Nasdaq Composite (IXIC) are all bracing for another round of weekly losses. While the major benchmarks started the week with a last minute victorybreaking wave bond yields rattled sentiment ahead of the Fed’s interest rate decision. As expected, the central bank raised interest rates 75 basis pointsdriving down inventories, while recession fears took hold and sent the market deeper into the red. To end the week, the Cboe Volatility Index (VIX) is go higherwhile the first-order index falls below the psychologically significant level of 30,000.
Earnings Call and Revenue Outlook Revisions
While the earnings record has been relatively thin lately, a few notable companies released their reports this week. General Mills (GIS) had one of the best post-earnings reactions, reaching a record after increasing its forecast for the full year. Conversely, Stitch Fix (SFIX) hit rock bottom after missing earnings, revenue and guidance for 2023. AutoZone (AZO), meanwhile, saw its comparable store sales 6.2% year-over-year increase.
Cosmetics group Coty (COTY) has revised its forecast for the full year, publishing a big increase thanks to strong demand for its luxury beauty products. On the other end, Novavax (NVAX) lowered its second quarter guidance, but JP Morgan Securities warned that the review was not enough.
Analyst Notes You May Have Missed
With high volatility in China, excess inventory in North America and currency headwinds in Europe, Barclays downgrades Nike (NKE) ahead of the blue-chip apparel maker’s latest quarterly report. Success of Western Digital (WDC) two-year lows following a bear note, while Canada Goose (GOOS) swept an upgrade as options bear targeted equity. Meanwhile, Eli Lilly (LLY) appeared a note of bull and US Food & Drug Administration (FDA) approval, Goldman Sachs was particularly optimistic that Estee Lauder (EL) headwinds were already accounted for and that Norwegian Cruise Line (NCLH) was upgraded to strong reservations.
Next week brings the Fed’s long-awaited decision
Next week marks the end of September, and there’s a lot to unpack before we kick off the new month. Wall Street will digest a deluge of consumer reports, while a handful of companies are about to enter the profit confessional. Also find out what shorting opportunities are waiting for you with call buyers out of the picture.
Many of us will read this and be oblivious to the global crisis. But if current trends continue, it will be soon enough for all of us. Most of us learned in elementary school that 97% of the water on the planet is salt water. And only about 1% of the total water supply is drinkable.
This becomes a difficult calculation for several regions of the world. A severe multi-year drought causes water levels to drop to historic lows. And the federal government is threatening to cut water use by 25% in the hardest-hit states of Arizona, California and Nevada.
And even if we are not subject to water restrictions, we are all likely to see higher food costs. One reason is that about 25% of the country’s food supply comes from California. A 2021 American Farm Bureau Federation survey found that 40% of farmers have sold some of their cattle herds.
But opportunities arise in the midst of the crisis, and it makes no difference. In this special presentation, we look at seven water stocks that sound like smart buys as the world searches for solutions.
See “7 Water Stocks to Buy as the World Goes Dry”.