These Stocks Led the Charge for Major Dow Gains Last Week — Are Bank Stocks Poised to Deliver?
The Dow Jones had a positive close to the week on July 15, exhibiting a 658-point increase, and was up another 167 points by midday of July 18. The biggest gains closing out last week’s trading came mostly from big banks and investment firms, but UnitedHealth led the pack, ticking upward nearly 5.5%, MSN reported.
The overall increase in the Dow, according to MSN, primarily came as a result of strong earnings reports from several companies — but was also bolstered due to promising news from the Fed.
Fed Governor Christopher Waller and St. Louis Fed President James Bullard said in an interview with The Associated Press that the Fed is considering a 0.75 percentage point increase — rather than a full percentage point jump — at the next Federal Open Market Committee Meeting.
Given this news, it may be worthwhile to take a look at some of the week’s hottest stocks and decide whether these are good investments in a bear market.
Big Bank Stocks Rise
Citigroup, Wells Fargo, and JPMorgan Chase fell in line right behind UnitedHealth to lead the pack with the biggest gains last week. The high interest rates bode well for banks, since said rates will increase their loan income. Interest rates for loans and credit cards tend to rise faster — and higher — than rates for savings, which is bad for consumers, but good for banks (and for investors who buy or hold bank stocks). In an interview with Yahoo Finance, however, JPMorgan Chase CEO Jamie Dimon said consumers are in “great shape” for a recession, with less leverage, solid savings, and more discretionary income than in 2008 or the ensuing Great Recession.
Other Finance Stocks to Consider
Amid rising interest rates, credit card and payments company American Express is also doing well, posting a 4.4% increase on July 15. Investment firm Goldman Sachs showed a similar increase, with trading and consumer lending both strong, MSN detailed.
Healthcare Stocks Show Solid Future
As a general rule, healthcare stocks tend to be less responsive to the whims of the market. People can’t control when they get sick or will need medicine, so the stock prices for healthcare companies tend to depend more on the business philosophies and actions of individual enterprises.
In this regard, UnitedHealth and Walgreens Boots Alliance are both shining. Walgreens Boots Alliance’s growth strategy and partnership with Village MD all but promises strong gains, according to Nasdaq.com. With a 5% dividend yield, The Motley Fool is recommending this stock as one to buy and hold.
Similarly, last week’s Dow leader, UnitedHealth Group, showed earnings that surpassed analyst estimates, according to MSN. MarketBeat ranks it a Moderate Buy, with 15 buy ratings, one strong buy and one hold. It pays an annual dividend of $6.60 per share.
Thinking About Other Stock Investments
Looking to capitalize on the growth of finance and healthcare without directly investing in any of these companies?
Experts at The Motley Fool, via a guest post on Nasdaq.com, are touting customer relationship management software Salesforce as a stock poised to skyrocket.
Although its customers include e-commerce companies, retailers, and sales teams of every ilk, healthcare and financial companies also rely on CRM (customer relationship management) software. As these industries grow, so will demand for CRM platforms — and Salesforce has held the no. 1 market share in global CRM spending for nine years, per Nasdaq.
A bear market may be a good time to increase your positions in performing companies or delve into new markets. Be sure to invest with a solid plan, understand your risk tolerance, and never invest more than you can afford.
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