Ownership of stocks by households is near a record. Why that could be a bad thing
Household ownership of the U.S. stock market is near a record, but that could be a worrisome development, according to Ned Davis Research. Individual investors are the largest owner of stocks, having allocated roughly 48% of their assets to equities in the first quarter, analyst London Stockton said in a note. The comeback rally of the last two months could be attributed in part to a strong retail presence in the stock market. However, the current level of households buying in at a time when the S & P 500 is near its record high should concern investors, even if the most immediate trend remains bullish. "In the near term, short-term sentiment had gotten extremely oversold in April and the trend is bullish with many of our models and indicators either bullish or neutral at worst," Stockton wrote. "But along with high valuations, high investor allocation to stocks doesn't leave much room for future buying," Stockton said. "Any change in investor preference could also send the market lower." .SPX YTD mountain S & P 500, year to date That's not the only corner of the market with the potential for selling pressure. Apollo chief economist Torsten Slok noted that record-high foreign ownership of the U.S. equity market, of 18%, could fall in the near future if the trade deficit is eliminated. "Foreigners selling goods to the US receive dollars in return, which are then used to purchase US assets, including US equities," Slok wrote. "If the trade deficit is eliminated, there will be fewer dollars for foreigners to recycle into the S & P 500." On Wednesday, all three major averages were higher ahead of the Federal Reserve's interest rate decision, even as investors continue to wade through trade uncertainty and the rising conflict between Israel and Iran.
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10 No-Brainer Warren Buffett Stocks to Buy Right Now
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2 Stocks Down 77% and 19% to Buy Right Now
PayPal is making some encouraging progress, but its stock still trades at a heavily beaten-down level. Prudential Financial is a high-yield insurance company that offers some protection from the consequences of rising debt levels. 10 stocks we like better than PayPal › Despite some significant bouts of volatility over the last year, the broader market has enjoyed a strong rally over that stretch. As of this writing, the S&P 500 (SNPINDEX: ^GSPC) has delivered a total return of 10.5% over the last 12 months. Indications that inflation might be moderating and hopes that interest rates will come down have played a big role in the gains. Even more than businesses in other sectors, the outlook for financial companies hinges heavily on macroeconomic conditions and the Federal Reserve's approach to interest rate policy. 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The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy. 2 Stocks Down 77% and 19% to Buy Right Now was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Miami Herald
an hour ago
- Miami Herald
It sounds sick, but Iran hostilities may be good for stocks
So, President Trump ordered B-2 bombers to drop bunker-busting bombs on three Iranian nuclear facilities late Saturday. He pronounced the result "a spectacular success," with Iran's nuclear enrichment facilities "completely and totally obliterated." There will be lots of media coverage Sunday and beyond on whether the operation worked and whether the United States will be dragged into a third war in the Middle East since 1991. Don't miss the move: Subscribe to TheStreet's free daily newsletter A question for investors, however, is this: How will stocks react? Related: Everyone should keep an eye on this Persian Gulf island There are some unknowns. There's been no verification that Iran's nuclear enrichment facilities are, in fact, totally obliterated. It's not clear if Iran will try to cut a deal to stop the Israeli and U.S. bombing or opt somehow to play a long game of defending itself with missile shots at Israel and U.S. military bases in the Middle East. Nonetheless, there's a good chance Wall Street will seize on the attacks as a prime stock-buying opportunity. That's what happened in 2003's Second Gulf War when U.S.-led forces invaded Iraq and toppled the dictatorial regime of Saddam Hussein. Related: Tesla releases new details about its next big deal Stocks started to tumble in late January 2003 as another war against Iraq became inevitable. The Standard & Poor's 500 Index was down as much as 9% for the year on March 11. But then investors started to believe the invasion would go well, and the S&P 500 started to recover. Indeed, when Baghdad fell on April 9, 2003, the index had recovered all the early losses and was up 8.2% from the March low. And stocks never looked back. The S&P 500 finished up 26.4% in 2023. The gain from the March 2003 low to year-end: 38%. Mirrorpix/Getty Images One will be able to see how investors and markets are looking at the conflict starting at 6 p.m. ET Sunday. 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Revenue will be off slightly at $21.8 giant Carnival Corp. (CCL) , before Tuesday's open. Between August 2024 and Jan. 30, the shares doubled to $28.49 because bookings were beyond terrific. Then, the shares fell 49%, thanks to the Trump tariff plan and the mini-stock panic. Carnival is back to $23.77. The quarterly revenue estimate of $6.2 billion is up 7.3% from a year ago. Earnings of 24 cents a share would be up 118%.Chip maker Micron Technology (MU) shares are up 47% this year, and Wall Street likes - no, loves - the stock, whose chips have carved out a lucrative spot in artificial intelligence. In fact, the shares are already ahead of one analyst's one-year price target. The revenue estimate is $8.8 billion, up nearly 30% from a year ago. Earnings of $1.59 a share would be up 156%.Nike (NKE) is having a challenging year. The shares are down 21% this year, third-worst among the Dow Jones industrial stocks. True, it's selling athletic wear and shoes again on but it is extremely vulnerable to the Trump tariff hikes. Barrons says Nike's factories in Vietnam, Indonesia and China manufacture 50%, 27% and 18% of all its footwear. (Yes, that adds up to 95% of production.) The Nike revenue estimate: $10.7 billion, down 15.1% from a year ago. Earnings of 12 cents would be down 88%. Related: Veteran fund manager who predicted April rally updates S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
