4 Blue-Chip Stocks To Buy As Markets See A Downturn
Zacks Investment Research | Oct 16, 2016 10:28PM ET
U.S. equities did eke out gains lately but the trend has been a downward one. Stocks remained in the negative territory over the last two weeks while the month is poised to register the steepest fall since January. With third-quarter earnings expected to be on the weaker side, a stronger dollar is adding to the woes. Biotech slump coupled with election-induced broader market volatility are also playing spoilsport.
Barring domestic concerns, China’s lackluster export numbers also make us believe that global growth is petering. HSBC Holdings (LON:HSBA) plc (NYSE:HSBC) has already warned of a severe stock market crash ahead. Amid all these, investors should trust blue-chip stocks which are capable of braving such market upheavals.
Let us know look at what’s plaguing the broader markets this month:
Earnings Weak, Dollar Strong
In spite of strong results from major banks, the third-quarter earnings growth for the S&P 500 index is expected to decline 2.2% year over year. While energy remains one of the biggest drags, major sectors like technology, autos and transportation also lack shine.In fact, earnings growth is expected to take a beating in the third quarter, which will be the sixth straight quarter of a decline for the S&P 500 index (read more: What Will the Q3 Earnings Season Bring? ).
Weak earnings indicate that investors are not getting value for their investments in such stocks. Add to this a stronger dollar, and investors are sure in a fix. A stronger dollar means reduced sales for U.S. multinationals, which could compel companies to trim earnings outlooks in the upcoming quarters.
Biotech Woes
The biotech market has also started to lose steam and has weighed considerably on the Nasdaq. The iShares Nasdaq Biotechnology (IBB) tanked 21.4% on a year-to-date basis and is currently trading below both the 50-day and 200-day moving averages as investors continue to reduce their risk appetite. Biotechs are generally considered a proxy for bullish bets.
ISHARES NDQ BIO Price
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