After a furious rally Wednesday that saw the beleaguered Nasdaq post a stunning 4.4% gain, giddy stock investors pushed all the major indexes higher after Federal Reserve Chair Jerome Powell told the world what many already knew: rate hikes will be lower going forward. With the December increase almost guaranteed to drop to 50 basis points, that will take the federal funds rate to 4.25% to 4.50%. While that is much higher than this time last year, it is a guarantee it will go higher still.
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While investors are hopeful that Thursday’s gigantic rally is the beginning of a new bull market, the reality is that layoffs are accelerating, inflation is still sky-high and, most importantly, the year-long interest rate increases will continue in the first quarter. When the terminal target is reached, it is likely to be in the 5.00% to 5.25% range.
Powell has made it clear that when the terminal rate level is attained, it will remain, as the mantra goes, “higher for longer.” That means any cut in the federal funds rate is unlikely until 2024, and importantly, the effect of interest rate increases is always lagging, so they will really start to be felt the next year.
We think it is smart to sell this likely bear market rally and use the proceeds to buy stocks that pay good dividends and can act as a hedge against further downside. That means hard assets. We screened our 24/7 Wall St. research database and found seven top stocks that are Buy rated, come with those good dividends and look well situated if the selling returns. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
ADM
This is a very solid play for rocky markets and is offering a very reasonable entry point. Archer Daniels Midland Co. (NYSE: ADM) processes oilseeds, corn, wheat, cocoa and other agricultural commodities. The company operates through the following segments.
The Ag Services and Oilseeds segment includes activities related to the origination, merchandising, crushing and further processing of oilseeds, such as soybeans, and soft seeds, such as cottonseed, sunflower seed, canola, rapeseed, and flaxseed, into vegetable oils and protein meals.
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