The S&P 500 Consumer Staples sector is showing an ascending triangle. This means that stocks are going through a consolidation period. An ascending triangle usually leads to a breakout — and more in today’s stock market recap.
Global markets rose today after Tuesday’s slightly weak economic data.
Tuesday’s Consumer Confidence Reports came in slightly lower than expected. New home sales were also lower than expected.
Retail sales make up two-thirds of our economy. Weak Federal Reserve data reinforces that interest rates don’t need to move higher. The bond market is rallying this morning after Tuesday’s Consumer Confidence Reports because traders expect the economy isn’t overheating.
The GDP report is out Thursday and the consensus is a quarter-over-quarter, annual growth rate of 6.5%. If we get a lower number, then our economy is not running “too hot.” The bond market will rise even more with the expectation of interest rates staying low. If growth is higher than the consensus, pressure would mount on the Fed to decrease economic stimulus and raise interest rates.
Consumer Staples stocks have the least sensitivity to interest rate fluctuations. This is important to note as we continue the battle between the Fed and the economy.
PepsiCo Inc. (Nasdaq: PEP) is in a flat-top breakout and also an ascending triangle. The all-time high for the stock came in late December. PEP is currently trading around the same level when the stock cooled off for a couple of months. If PEP is able to make a new all-time high, this stock could rally.
I’ve identified three other stocks showing great potential to the upside as we continue assessing inflationary pressures. These stocks will benefit from American summer activities and will fare better than other stocks if inflation takes off.
In today’s video, I’ll go over why the Consumer Confidence Index is another key report ahead of Thursday’s GDP number… the relationship between stocks and bonds… whether it’s safe to enter the QQQ again… and the Top ETF that has a strong opportunity for profit.
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