Stocks Continue to Free-Fall as the Bear Market Worsens

Stocks continued to crater today, Thursday June 16, 2022, as investors saw the 0.75% Fed Funds increase yesterday as a sign the economy is heading towards (or perhaps in) a recession.

On the day, the S&P 500 fell 3.3% while the NASDAQ declined 4.1%. Across my screen, the only stock in our coverage that was positive was Johnson & Johnson (JNJ) which was up 0.1%.

The S&P 500 closed at 3667. Investor had thought a market low could be around 3500, but then this week Leon Cooperman told CNBC he thought the S&P could trade for 18x S&P 500 earnings of $180, which would be 3240. Analysts currently have the S&P 500 earning $232 in profits this year.

Chart of the Day

Our Chart of the Day is this ten-year chart of Johnson & Johnson as of  May 2 when the stock was $185. Today, JNJ closed at $170.

JNJ is a stable stock that can provide a high level of safety in a portfolio, but this has been a slower-growing stock. The stock has an Est. LTG of just 7% per year. A dividend yield of around 3% pushes the estimated total return to above 10% a year.

J&J’s credo has been “Businesses should make a solid profit” and outside of 2020, the company has delivered as profits have increased every year since 1984.

The company has a AAA rating from S&P, has increased its dividend every year since 1963. Last qtr, management increased the qtrly cash dividend 7% from $1.06 to $1.13 per share. In 2021, management repurchased $3.5 billion in stock.

JNJ is a core holding in the Conservative Growth Portfolio. It’s a safe stock in a downward trending market.

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