After a nice rally over the last week, the markets have been roiled once again, finishing sharply lower on Tuesday. You can chalk that up to investors who got spooked when the 10-year Treasury yield crossed the dreaded 3-percent mark to hit the highest level since 2011.
The S&P 500, Dow Jones and the Nasdaq Composite all finished nearly a percentage point lower thus cutting short their 10-day climb.
Practically all 10 sectors were lower on the day with telcos, real estate and utilities faring worse than the rest.
J.P. Morgan strategist, Samantha Azzarello, however, says that equities will remain on safe ground up until Treasury yields approach 4 percent and as long as the economy continues doing well. Other Wall Street analysts seem to share her sentiments, saying that the markets are overreacting.
Investors looking to add to their positions can be encouraged by the fact that the economy remains hale and hearty.
The latest consumer spending report by U.S. Census Bureau revealed that retail spend was up 0.3 percent month-over-month and 4.7 percent year-over-year, signaling an economy that's still growing at nice clip.
Stocks with Some Oomph
A handful of stocks have been looking a lot livelier than the rest of the market, with many of those, not surprisingly, belonging to the tech sector. But not all these are worthy of investors' consideration.
Despite their eye-popping gains, Netflix (NASDAQ:NFLX), Chipotle Mexican Grill (NYSE:CMG) and TripAdvisor (NASDAQ:TRIP) are trading way above their 200-day EMA and risk losing steam before long.
NFLX Stock 12-Month Change
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Source: Investing.com
#1 Intel Corp.(NASDAQ:INTC)
INTC Stock 12-Month Change
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Source: Investing.com
Others like Intel, however, look a lot more promising. INTC made a nice double-bottom back in January and February and has since then been making higher lows and higher highs--a clear bullish signal. Previously, INTC had made another double-bottom in late 2016.
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On April 27, INTC touched its highest level since the Dotcom bust before briefly retreating and then resuming its climb. INTC now sits 16.8 percent higher in the year-to-date.
There are a couple of reasons why this stock has been enjoying investors' attention in an otherwise quiet market. The largest semiconductor chip manufacturer has been largely missing in the industrywide multi-year rally, leaving it looking considerably cheaper compared to peers like Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD).
#2 Amazon (NASDAQ:AMZN)
AMZN Stock 12-Month Change
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Source: Investing.com
AMZN stock is up 33.8 percent in the year-to-date. Related: The Precious Metals Rally Is Over
Unlike Intel, AMZN stock has never been considered cheap--its PE (ttm) of 199 makes it one of the most expensive in the retail sector.
Amazon PE Ratio
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Source: Nasdaq
Amazon, however, is not merely a retailer--the company also owns the largest public cloud, AWS. This is an incredibly lucrative business, bringing in nearly 60 percent of Amazon's operating income. Profits from the cloud business helps Amazon to undercut other retailers on price, something that has helped the company to keep growing rapidly despite attaining a massive size.
If anything, Amazon's top line growth has accelerated over the past 12 months and hit annual revenue of nearly $200 billion, thanks to rapid growth in both its cloud and retail business.
Its rapidly expanding bottom line has also neem helping the stock to gradually grow into its steep valuation.
#3 Salesforce.com (NYSE:CRM)
CRM Stock 12-Month Change
Source: Investing.com
CRM stock made an all-time intraday high of $131 on May 10, and is currently sitting on an year-to-date gain of 25.3 percent.
Salesforce has managed to maintain its top perch as the most dominant SaaS company despite intense competition from the likes of Oracle (NYSE:ORCL), Microsoft (NASDAQ:MSFT), WorkDay (NASDAQ:WDAY) and others.
To this end, the company reported revenue growth of 24 percent year-over-year to $2.85 billion and $20 billion in backlogged contracts during the latest quarter, not only underlining its strong position in the industry but also giving good visibility of even more growth ahead.
Further, investors have been excited by Salesforce's AI partnership with International Business Machines (NYSE:IBM). The partnership could help strengthen Salesforce's CRM offerings due to IBM's huge expertise in the field.
By Alex Kimani for Safehaven.com
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