
Stocks jumped out of the gate and never looked back as investors sought an encouraging read on consumer confidence. Solid earnings from logistics giant FedEx (FDX (opens in a new tab)) and retailer of athletic footwear and apparel Nike (NKE (opens in a new tab)(e) only added to the day’s positive momentum, with both stocks rising in response to their quarterly results. It was the good news Wall Street had been looking for, and sent the major market indexes significantly higher.
Starting with the economic data, the Conference Board said this morning that consumer confidence increased to 108.3 in December from November’s reading of 101.4. This was the first increase in consumer confidence since September, and the highest reading since April. “The economy is still heading towards a retreatbut the consumer continues to show signs of resiliency that could delay a significant fall in equity,” says Edward Moya, senior market strategist at currency data provider ÓANDA (opens in a new tab).
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Meanwhile, in earnings news, FedEx stock rose 3.4% after the company reported higher-than-expected fiscal second-quarter earnings and said it will cut costs by an additional $1 billion this fiscal year, bringing total savings to $3.7 billion. In addition, Nike increased by 12.3% – making it the best Dow Jones stock today – after the firm beat top and bottom line estimates and said inventories were down compared to the previous quarter.
For the major indexes, the Dow Jones industrial average rose 1.6% to 33,376, the S&P 500 index received 1.5% to 3,878, and the Nasdaq Composite jumped 1.5% to 10,709.
Be Prepared for This Bear Market to Continue
Today’s broad gains were promising, but let’s not forget that the stock market remains in bear market territory. Plus, many strategists expect the bear market continue well into 2023.
“The Federal Reserve remains committed to recovery inflation by keeping monetary policy tight, as Jerome Powell emphasized in his press conference, which is not great news for the stock market and supports the bear market continuing into 2023,” says James Demmert, the company’s chief investment officer. Main Street Research (opens in a new tab). “The Fed is trying to engineer an economic soft landing that is highly likely to fail and lead to a recession in 2023.”
As a result, the major market indexes are “vulnerable at current levels,” Demmert adds.
Given this volatile market backdrop, investors would do well to focus on sectors that historically perform well in market downturns, such as Health care or consumer staples. Another option is to accept the Best bear market ETFsor funds that cover different strategies that work well in uncertain times.