Last week’s downturn in the equity market came with no change in the outlook for 2.5% Q1 real U.S. GDP growth, and the chance of recession in the next 12 months remained at 35%. Despite this, market participants seem eager to find reasons to throw cold water on stocks. Minneapolis Fed President Neel Kashkari contributed to this sentiment by suggesting that if there is no progress on inflation, rate cuts may not be necessary. However, Fed Chair Jerome H. Powell emphasized that recent data do not materially change the overall picture of solid growth, a strong labor market, and inflation moving towards 2%.
The Dow Jones Industrial Average failed to break the psychologically important 40,000 level, dropping below 39,000 instead. However, the benchmark is still significantly higher than the recent Bear Market low set in September 2022, with a total return of 536% since 1999. While downside volatility may continue, it’s important to remember the long-term rewards of investing in equities.
For Value-oriented investors, a health insurance stock, Elevance Health (ELV), saw a decline in price following a ruling by the Centers for Medicare & Medicaid Services (CMS) that left the preliminary payment proposal for Medicare Advantage plans unchanged. The government’s decision may lead to lower earnings forecasts for the coming years, but ELV has relied less on Part C plans for growth compared to its peers. With a P/E of 13.7 times the NTM EPS forecast and predicted 12% growth in the next three years, ELV remains a solid investment opportunity.
This condensed version of an article from theprudentspeculator.com highlights the recent market trends and investment opportunities. The Prudent Speculator’s weekly commentary provides valuable insights into stock market news, investing tips, and economic trends. For regular reports and free stock picks, readers can sign up for the newsletter on the website. Stay informed and make educated investment decisions with the help of such resources.
