The best investors use bear markets and major periods of panic to start positions in their favorite stocks. The major money managers are rather good at pricing in the future into stock prices, which is part of the reason why Wall Street is often ahead of Main Street, as we saw during the covid comeback and the subsequent beating growth and tech stocks started to take in late 2021 as investors realized the Fed would have to raise rates to cool the economy. The outlook for Q3 FY22 earnings and full-year fiscal 2023 have already dropped significantly and the 10-year and two-year Treasury yields are responding to the Fed’s rate hikes and projected course of action. 13, the market might not have to wait too much longer for an even clearer picture.Įarnings and interest rates drive stock prices and the more clarity Wall Street gains on those fronts, the better. With the heart of Q3 earnings season set to begin in the middle of October and September’s CPI data due out on Oct. Wall Street had been waiting for the current economic turmoil to take its toll on sales and, more importantly, earnings before they consider nibbling at stocks again. But investors should take solace in the fact that higher interest rates and soaring inflation are already showing up in corporate earnings outlooks. Meanwhile, the Nasdaq is down over 6% in the past two years to trade where it was in the summer of 2020. The S&P 500 is trading at new 2022 lows, with it at levels last seen in late November of 2020. Thankfully, investors who plan to own stocks for years to come don’t need to pinpoint an exact bottom and should instead consider slowly starting positions in blue-chip stocks with great fundamentals that should look like steals at these levels down the road. Now might not be time to call a market bottom, with inflation still clocking in at 40-year highs and the Fed determined to do all it can to drag prices down.
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