Today, Thursday May 19, 2022, stocks were mixed as investors are still cautious about inflation and fear of a recession.
On the day, the S&P 500 delivered a return of -0.6%, to close at 3901. The NASDAQ composite deliver a -0.3% return. Both were considered good news after the horrific selloff the day prior.
The stock market officially went into an uptrend this week on Tuesday. Many investors were all-excited to buy, buy, buy on Wednesday. But then we got scared off as Target (TGT) missed profit estimates in a big way, causing the stock and the stock market itself to tank. TGT was down another 5% today, and closed at $153.
Leading stocks today were some of the most beaten-down speculative stocks, including:
- Bill.com (BILL) was up 13% to $114.
- Sweetgreen (SG) jumped 16% to $22.
- Unity Software (U) was up 11% to close at $42.
I like the stocks listed above, but all have little-to-no profits and might have jumped today on short covering, not because they are seen as leaders of the next Bull Market.
Market conditions are shaky. I’m taking a wait-and-see approach to investing more cash. I had been thinking the market (the S&P 500) was worthy of a 17 P/E or around 3900. But after Target’s bad earnings report, I think a recession could be taking place in America right now. And that could lead to the market’s P/E declining to 14 or 15, or perhaps another 15% decline on the S&P 500 to 3400-or-so. This “take” is widespread amongst market analysts and brokerage firms this week, including Morgan Stanley.
Chart of the Day
Our chart of the day, today, is this one-year chart of Stryker (SYK) as of May 7 when the stock was $240. The stock closed at $231 today. Stryker has been taking heat from Spruce Point Capital, in a report you can read here.
I’ve been displeased with Stryker as the company has posted poor profit growth the last three qtr, and missed estimates each time.
During the past four qtr, 2022 profit estimates have fallen from $10.47 to $10.17. $9.80, and now $9.65. That’s bad. The stock has also done poorly, as you can see in the chart.
Healthcare stocks are supposed to be leaders in Bear Markets. SYK has certainly been a laggard.
