Today’s episode of Full Court Finance at Zacks dives into some of the reasons why the technology-heavy Nasdaq entered a bull market, with it up over 20% from its mid-June lows. The episode then explores three stocks that operate in the broader world of technology—Adobe, Mastercard, and Microsoft—that run businesses poised to hold up well during the current economic slowdown and thrive for years to come.
The July consumer price index report was the big event on Wall Street during the week of August 8. Some investors latched onto the fact that prices came in flat compared to June. And July’s 8.5% CPI figure came in below June’s 9.1% annual climb.
Wall Street responded by sending the Nasdaq soaring nearly 3% Wednesday following the CPI release to push it over the bull market threshold of a 20% climb off its lows. The recent market positivity might suggest investors are pricing in a continued decline in oil and gas, as well as significantly lower consumer spending that would be needed to bring inflation down.
The S&P 500 has also climbed over 16% during this same stretch. With the larger climbs, of course, following the market’s worst first-half since 1970. The run since the mid-June lows crucially coincided with sliding 10-year U.S. Treasury yields, which are hovering around 2.85% on Friday vs. their 3.5% peaks. Lower interest rates boost stock prices. The other key factor that determines stock prices, earnings, held up well in Q2.
The backdrop might leave investors wondering if it’s time to buy some of the mega-cap technology stocks that are helping drive the broader market comeback. The first stock up on the list today is credit card power Mastercard MA.
Mastercard is expanding and diversifying beyond its traditional credit card segment and is prepared to thrive in an increasingly cashless and digital payment-based economy. Mastercard topped Zacks Q2 projections on July 28 and provided solid guidance in the face of mounting worries about a slowing economy. MA lands a Zacks Rank #2 (Buy) at the moment and it trades 20% below its current Zacks consensus price target.
Changing gears, Adobe ADBE and its subscription-based creative and design software have become the backbone of tons of art and media. Adobe’s various offerings are utilized by Hollywood studios, global advertising agencies, college students, and beyond. ADBE’s guidance came in a bit lower than projected, but it still marks what would be the continuation of an impressive streak of top and bottom-line growth.
The last stock up today is Microsoft MSFT. The company was one of the first to warn Wall Street about the negative impacts the strong U.S. dollar would have on its top and bottom lines. Microsoft did fall short of our Q4 FY22 ESP estimates on July 26. But even with its slightly downbeat guidance, MSFT’s outlook showcases the power and impact its growing portfolio has throughout the global economy, from cloud computing on down the line.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Mastercard Incorporated (MA) : Free Stock Analysis Report
Adobe Inc. (ADBE) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research