Investor Caution Drives Down Major U.S. Indexes Ahead of Elections

Last week, all three major U.S. indexes closed lower as investors adopted a cautious stance just before the election season. The Dow Jones Industrial Average dropped by 1.90%, while the S&P 500 and the Nasdaq Composite decreased by 0.78% and 0.12%, respectively.

Choppy Trading Amid Election Uncertainty

Trading has been volatile as the U.S. presidential elections approach. The 10-year treasury yield reached 4.222%, its highest in three months, heightening concerns about potential surges in federal borrowing depending on the election outcomes. With strong macroeconomic data in recent weeks, investors anticipate that the Federal Reserve will be slow to cut interest rates. Additionally, remarks from Richmond Fed President Thomas Barkin suggest that achieving the Fed’s 2% inflation target may take longer than previously expected, increasing investor anxiety about future rate cuts.

Geopolitical Tensions Affect Global Markets

On an international scale, rising tensions between Iran and Israel are likely to impact global supply chains and energy prices, adding another layer of uncertainty for investors.

Zacks Guidance: Strategies for Market Success

Despite the challenging market conditions, Zacks provides investors with impartial guidance aimed at outperforming the market. Over the past three months, Zacks Research has applied time-tested methodologies to assist investors in navigating the prevailing uncertainty.

Here are some notable successes:

Versus Systems and Bilibili Experience Growth After Upgrades

Shares of Versus Systems Inc. (VS) have surged 84.1% since being upgraded to a Zacks Rank #2 (Buy) on August 28, outpacing the S&P 500’s 3.05% rise. Similarly, Bilibili Inc. (BILI), upgraded to a Zacks Rank #2 on August 27, has seen a return of 44.8% against the S&P 500’s 3.2% increase.

The Zacks Rank System: A Proven Tool for Investors

The Zacks Rank is a respected short-term rating system based on earnings estimate revisions. Research shows a strong correlation between these trends and stock price movements. A hypothetical portfolio of Zacks Rank #1 stocks recorded a +6.1% return year-to-date as of April 1, 2024, compared to +11.3% for the S&P 500 index. In 2023, this portfolio posted a +20.63% return, closely trailing the S&P 500 index’s +24.83% return.

Since 1988, the Zacks Model Portfolio has outperformed the S&P index by over 16 percentage points, delivering an annualized return of +27.6% versus the S&P 500’s +11.1%.

Zacks Recommendations Boost Banco BBVA and Canadian Imperial Bank

Shares of Banco BBVA Argentina S.A. (BBAR) have risen 31.4% since being upgraded to Outperform on September 3, while the Canadian Imperial Bank of Commerce (CM) saw a 9.6% increase following its upgrade the next day. In comparison, the S&P 500 increased by 2.7% and 4.8%, respectively, during the same period.

The Zacks Recommendation system is designed to predict performance over the next 6 to 12 months, based on trends in earnings estimate revisions. Stocks are classified into three categories: Outperform, Neutral, and Underperform, allowing for analyst discretion based on various factors.

Palantir and Shopify Shine on Zacks Focus List

Shares of Palantir Technologies Inc.(PLTR), which is part of the Zacks Focus List, have increased by 81.3% over the last 12 weeks after being added to the list on March 26, 2024. Another Focus List stock, Shopify Inc.(SHOP), appreciated by 45.2% during this time, with the S&P 500 rising just 6.2%.

In Q1 2024, the Focus List portfolio returned +10.23%, slightly trailing the S&P 500’s +10.56% return. In 2023, this portfolio achieved a +31.44% return, surpassing the S&P 500’s +26.28%.

Fair Isaac and Walmart Achieve Notable Gains

Fair Isaac Corporation (FICO), part of the Earnings Certain Admiral Portfolio (ECAP), has risen 25% over the past 12 weeks, followed by Walmart Inc.(WMT), which gained 20.5%.

The ECAP, which includes 30 conservative long-term Buy and Hold stocks, returned +9.08% year-to-date through March 31, 2024, compared to +10.42% overall market performance. While the portfolio delivered a +12.17% return in 2023, it underperformed in 2022 with -4.7% compared to the S&P 500’s -17.96%.