Tesla, Microsoft, Macy’s, Dominion Energy and Ventas

Will Microsoft's (MSFT) Cloud Segment Drive Its Q1 Earnings?

For Immediate Release

Chicago, IL –October 25, 2019 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Tesla TSLA, Microsoft MSFT, Macy’s Inc. M, Dominion Energy Inc. D and Ventas Inc. VTR.

Here are highlights from Thursday’s Analyst Blog:

S&P 500 Stocks to Buy on a “Great Rotation”

Wall Street appears to be returning on its normal course as some upbeat earnings reports from Tesla and Microsoft as well as a partial trade reprieve are adding to the optimism.  The S&P closed above 3,000 on Oct 23, Dow Jones finished above 26,883 and the Nasdaq Composite traded higher to close at 8,119.

Though still not out of woods, the U.S. economy has been showing signs of improvement. The so-called “inverted yield curve,” which gives signals of an impending recession, reverted back to normal on Oct 11, per Reuters. It indicates investors’ high level of confidence in the economy.

Weakness in Q3 GDP May Lead to a More Dovish Fed

The Atlanta Fed’s GDPNow model estimates the U.S. economy expanded 1.8% in the third quarter, down from the second quarter’s growth of 2%. Goldman Sachs also reduced its outlook for Q3 GDP in recent times and quoted the expected figure at 1.7%. The Rapid Update tracker run by CNBC and Moody’s Analytics predicts Q3 growth rate at 1.5%. Softer manufacturing and retail sales data led to such weakness.

But then such weakness led to a dovish Fed. The Fed has already enacted two rate cuts this year and may enact a further cut in October. At the current level, according to CME FedWatch tool, there is a 93.5% chance of a 25-bp rate cut in the Oct 30 meeting.

Why This is the Time for S&P 500 Investing?

If further rate cut happens, incessant cheap money inflows will likely strengthen stocks further. Investors should also note that though there are pockets of weakness, the U.S. economy is better positioned than most developed economies. This should be favorable for stock investing. A partial U.S.-China trade deal could add to the strength to the equity market.

However, in a low-rate environment, investors would be more interested in looking out for securities that ensure regular current income. It is interesting to note that more than half of the S&P 500 companies now yield more than U.S. 10-year treasuries, according to Todd Rosenbluth, the head of ETF and mutual fund research at CFRA. And, yield on the benchmark U.S. treasury was 1.77% on Oct 23 (read: Is 60/40 Rule Dying? Dividend-Heavy ETFs for Retirees).

Time for Great Rotation?

Bonds have seen their share of high this year thanks to growth worries.Of late, “money is coming out of fixed income investments.” Fund managers may be looking to “rebalance portfolios and position for 2020 by moving money into selected stock sectors,” per Investopedia. And with this we can see the start of the Great Rotation from fixed income into equities.

Stocks in Focus

Macy’s Inc. – Yield 9.52%

Macy’s is one of the leading department store retailers in the United States. This stock has a Zacks Rank #2.

Dominion Energy Inc.– Yield 4.43%

The company together with its subsidiaries produces and transports energy in the United States. It is a major energy company engaged in regulated and non-regulated electricity distribution, generation and transmission businesses. This Zacks Rank #2 company comes from a top-ranked Zacks industry (top 26%).

Ventas Inc.– Yield 4.40%

This Zacks Rank #2 company is a healthcare real estate investment trust that is mainly engaged in the acquisition and ownership of seniors housing and healthcare properties, and leasing them to unaffiliated tenants or operating them through independent third-party managers. The stock belongs to a top-ranked Zacks industry (top 35%).

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Media Contact

Zacks Investment Research

800-767-3771 ext. 9339                                                                            

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 does not engage in investment banking, market making or asset management activities of any securities. 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 in this press release.

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