The stock market is having another nasty bearish session on Tuesday on fears that the Federal Reserve will raise interest rates for a longer period to a higher level and that could tip the economy into a recession. The central bank, according to the Wall Street Journal, plans to raise rates above 5% next year to fight inflation – particularly high wage inflation, as the government’s jobs report shows November last week. The current range for the Fed’s short-term policy rate is 3.75% to 4%. While a smaller 50 basis point hike at next week’s Fed meeting is expected after four consecutive 75 basis point increases, it’s what could happen in 2023 that shakes stocks for a second consecutive session. Money is a friend when the market is going through tough times. However, we remain bullish on individual stocks over the longer term and scan the market for situations to slowly put cash to work. Nothing aggressive, of course, but our cash position of around 12% gives us room to become more opportunistic as prices fall. What we look for We look for situations where we can improve our average cost base or potentially even violate it if we have oversold. But one of the most important characteristics we look for before buying is confidence in short-term profits. Yes, that means a business has to make money – a theme we’ve hammered on the table all year. We also prioritize resilience in the face of uncertain economic conditions. That’s why we’ve relied heavily on our core products like Procter & Gamble (PG) and Constellation Brands (STZ), healthcare names like Johnson & Johnson (JNJ), Eli Lilly (LLY), Humana ( HUM) and Danaher (DHR), and also some old school cyclical stocks like Linde (LIN) and Honeywell (HON) which have the right end markets for the current environment. Honeywell CEO Darius Adamczyk was on CNBC on Tuesday, giving us an encouraging view of how the company plans to navigate these tricky economic waters. We believe Honeywell is well positioned to capitalize on pockets of strength. The market is already eyeing 2023 earnings, and these are the types of companies that have reliable growth prospects regardless of the twists and turns in the economy. Tech stocks, on the other hand, are still risky for new money due to their lofty valuations, inflated cost structures and exposure to weakening pockets of the economy. Monitoring our Bullpen Outside of the current portfolio, we continuously monitor our watchlist of bullpen companies such as Emerson Electric (EMR). However, as Jim Cramer wrote on Sunday, we believe the stock has had too big a run from late September to start buying now. Patience has been rewarded countless times this year, and we want to see more hindsight before we buy. We are also working on refreshing our Bullpen as we generally like to do every few months or so. We plan to update the Investing Club with new additions in the coming days. (Jim Cramer’s Charitable Trust is long PG, STZ, JNJ, LLY, HUM, and DHR. See here for a full list of stocks.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Traders work on the floor of the New York Stock Exchange during morning trading on December 06, 2022 in New York City. The Dow Jones opened at a low this morning, continuing its downward trend, plunging more than 400 points at the stock market’s close on Monday.
Michael M. Santiago | Getty Images
The stock market is having another nasty bearish session on Tuesday on fears that the Federal Reserve will raise interest rates for a longer period to a higher level and that could tip the economy into a recession.
#Heres #stand #weeks #sharp #backtoback #market #declines