Critical information for the U.S. trading day
Who’s ready for October?
With September all but over, we’re facing a month that can be psychologically tough for investors, given some of the biggest market crashes in history have occurred in October. That month may already be front loaded with some extra stress, thanks to political headlines swirling around President Trump and the White House, along with trade and economic worries.
As of late, jittery investors have been seeking out value stocks — those companies believed to be undervalued in the market — and backing away from high-growth momentum type stocks such as Amazon AMZN, -0.83%.
Our call of the day comes from a fan of value stocks — Vahan Janjigian, chief investment officer at Greenwich Wealth Management, who thinks they are due for a revival after falling out of favor over the past 10 years.
“My view is that you always want to be investing in stocks that are selling for less than their worth,” Janjigian told MarketWatch in an interview.
He offers up three stocks he thinks investors are overlooking right now, starting with IBM IBM, -0.22%. He thinks the company, up 29% so far this year, still has a lot to offer investors. While some worry the multinational technology company overpaid for the acquisition of software group Red Hat, he loves IBM for its cash flow and the fact it pays a “very nice dividend.”
Cash flow represents money moving in and out of a corporation and if it’s rising, that means there’s money to reinvest, pay the bills and return cash to shareholders.
He also likes oil and gas exploration group Murphy Oil MUR, +0.60%, also for its strong cash flow and a “generous dividend.” The group’s fortunes are tied to the price of oil, so it rides those prices up and down. Janjigian doesn’t think Saudi Arabia will get its oil facilities back online as fast as they say they will, following attacks earlier this month. If that pans out, it’s bullish for oil, and Murphy.
Finally, he’s keen on retailer Macy’s M, +0.26%, the S&P’s worst performer this year which produced a dismal set of earnings last quarter. In its favor, the CIO argues Macy’s is still very profitable, and management has pledged to sustain the dividend. They’ve also got enough cash flow to pay debt and even make a strategic investment if needed.
The market
The Dow DJIA, -0.26% , S&P COMP, -1.13% and Nasdaq COMP, -1.13% are up in early action, while gold GCZ19, -0.79% tumbles. Oil CLX19, -0.41% is down on signs tensions between Saudi Arabia and Yemen may be easing. The dollar DXY, -0.01% is flat.
European stocks SXXP, +0.47% have had a positive session, while Asian markets ADOW, -0.68% had a mixed day, with losses in China SHCOMP, +0.11%.
The chart
UnitedHealth shares UNH, -0.10% are looking at a 12% loss for the third quarter, the worst quarterly performance since 2010. Providing our chart of the day is Miller Tabak + Co.’s lead strategist Matt Maley with his view on why shares have had a bumpy ride:
“Some of our customers have started calling UnitedHealth the “Elizabeth Warren Indicator”. When she falls in the polls, the stock rallies. However, when she rises in the polls (like she has in a meaningful way recently), the stock goes down,” he explains.
Recent polls put her neck and neck with former Vice President Joe Biden as a possible Democratic candidate for the 2020 presidential race. Warren, unlike Biden, backs Sen. Bernie Sanders’ health care plan that would eliminate the role played by private insurers.
The buzz
Shares of Peloton Interactive PTON, -2.02%, which sells machines connected to live online fitness classes, are flat after a flop on the first trading day Thursday, reflecting investor doubts about fast-growing tech names. Meanwhile, entertainment agency Endeavor canceled its own IPO plans.
Apple AAPL, -0.49% reportedly plans to bring feature-length movies to the theater before releasing them on its own streaming service.
Wells Fargo WFC, +3.77% has named former Bank of New York Mellon BK, -4.50% chief, Charles Scharf, as its new CEO.
Shares of Micron Technology MU, -11.09% shares are down after the memory-chip maker posted another big earnings fall and forecast a downbeat holiday season.
The economy
Data showed rising durable goods orders, but weak business investment, while consumer spending barely budged as Americans saved more. Still to come, the University of Michigan consumer-sentiment index. We’ll also hear from Fed Vice Chairman for Banking Supervision Randal Quarles and Philadelphia Fed President Patrick Harder.
The quote
“You know, Jane, it was like applying for a job and getting 66 million letters of recommendation and losing to a corrupt human tornado.” — That was former Secretary of State Hillary Clinton commenting on her loss to President Trump in the 2016 election. Her interview with ”CBS Sunday Morning,” is set to air Sunday. Trump has yet to respond.