“Cash may not be junk,” said BNY Mellon Investment Management
Conventional wisdom is that holding cash in an inflationary environment is not recommended, but “cash may no longer be junk,” said Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management.
When asked if cash and Treasury bills are attractive with an inverted yield curve, Mitra said he agreed, emphasizing the benefits of holding cash in dollars.
“I think it’s an area that’s still looking pretty good, and it’s an extension of the whole dollar’s long-term story,” he said.
The dollar index has climbed steadily this year, rising from below 98 to above 111 as of Tuesday.
CNBC Pro: Here’s what’s next for stocks, according to Wall Street pros
September has finally come to an end, much to the relief of many stock investors after a rough month, with all major U.S. indexes posting sharp losses.
Historically weak months are now firmly reflected in the rear-view mirror, what does the outlook for the stock market look like as we enter the fourth quarter of the year?
CNBC Pro combed through the research to see what Wall Street was thinking.
Professional subscribers can read more here.
— Xavier Ong
S&P Global says focus on fourth-quarter earnings guidance over third-quarter actual numbers
S&P Global believes that fourth-quarter earnings forecasts given by companies when reporting third-quarter results have far more impact on the future direction of the market than the actual third-quarter numbers themselves.
“October brought earnings, Q3 expectations have fallen 7%, and the rumored numbers don’t stop there,” senior index analyst Howard Silverblatt wrote over the weekend. The bigger concern (than the actual numbers for the third quarter, when consumers were still spending) is the guidance for the fourth quarter that if consumers pull back, inflation will continue and the Fed’s ‘adjustment’ will have a more material impact.”
Analysts expect third-quarter S&P 500 earnings to rise 6.1% from a year earlier and nearly 18% from the second quarter of 2022, S&P Global said.
Next year’s estimates call for 2022 earnings growth of 14.3%, corresponding to a forward P/E ratio of 15.0.
Silverblatt also looked at the typical performance of the S&P 500 in October. “Historically, the index has risen 57.4% of the time, with an average gain of 4.18% in up months, a decline of 4.67% in down months, and an average decline of 0.46% overall,” he wrote.
After-hours stock moves: Rivian, Dynatrace, and more
Some stocks moved in the hours following the news, including:
- Rivian — The electric-car maker rose 2.7% after the market opened, announcing that production for the quarter ended Sept. 2 met expectations. 30.
- Dynatrace — The software intelligence company rose 4.6% after being upgraded to buy by JPMorgan. The stock rose 3% in regular trading.
See the full list here.
— Alex Haring
Futures open slightly
The three major stock indexes opened slightly after the bell on Monday.
Nasdaq 100 futures opened the most with gains, up 0.26%.
Futures linked to the S&P 500 rose 0.17%. Dow Jones Industrial Average futures rose 31 points, or 0.10%.
— Alex Haring