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The Zacks Analyst Blog Highlights Weyerhaeuser, Delta Airlines, and Monolithic Power Systems

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·6 min read
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For Immediate Release

Chicago, IL – June 01, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Weyerhaeuser WY, Delta Airlines DAL, and Monolithic Power Systems MPWR.

Here are highlights from Tuesday’s Analyst Blog:

Time to Buy in June? Global Week Ahead

Across the Global Week Ahead, the U.S. and world financial markets put the wraps on what has been a turbulent month of May.

What's on tap?

· U.S. nonfarm payroll additions for May on Friday

· A European consumer price inflation update shows up on Tuesday, and

· Mainland China business activity data comes out, both Tuesday and Wednesday


Taken together, this three-region set of macro data could set the tone for June.

Next are Reuters' five world market themes, reordered for equity traders—

(1) Sell in May and Go Away, then Buy in June?

The sell-in-May-and-go-away adage applies to equities and yes, investors dumped stocks, especially those listed on the tech-heavy Nasdaq.

But softer data have brought buyers back to bonds, so equities have bounced. Yields on the global Bloomberg-Barclays index have slipped over 10 bps in May.

Still, there is no sign of any monetary policy respite, with Australia, New Zealand, the United States and Britain all upping rates in May to hit inflation.

June will bring more of the same: a 50-bps rate hike in Canada and the United States, and a likely quarter-point Bank of England move. Rate-hike laggards, the ECB and Switzerland, should lay out policy-tightening plans.

But listen to rate-setters' language. Some reckon the Fed may signal a pause if data worsens.

Sell in May could give way to buy in June.

(2) U.S. Nonfarm Payroll Data Friday

Friday's U.S. jobs data could show whether the Federal Reserve's cumulative 75 basis points worth of rate hikes since March are being felt by a robust labor market.

Analysts polled by Reuters forecast the economy added +350K jobs in May, versus a solid +428K in April.

Recession worries are now rising, with data showing weakness in areas such as housing. Some banks warn of an increased chance of an economic downturn.

Yet any signs of a softening in the jobs market may not slow a Fed intent on raising rates as high as needed to squash inflation, a battle Fed chief Powell concedes will bring "pain."

Markets expect 50-bps hikes in June and July.

(3) Have Traders Seen the Peak in the U.S. Dollar?

After soaring to two-decade highs, the dollar rally has gone into reverse. Against a basket of currencies, it has fallen -3% from mid-May peaks, while the euro has rebounded to a one-month high.

Investors are worried the U.S economy may not prove as resilient to a downturn as they thought, should interest rates keep rising.

Added to that, ECB boss Christine Lagarde just signaled that an end to negative interest rates is round the corner — showing that even rate-hike laggards are joining the tightening party.

Few investors are willing to call a dollar peak just yet — another tumble on financial markets could see it bid up as a safe-haven once again — but most will keep close tabs on data to see how the U.S. economy is faring.

(4) Euro Area Inflation Updated Tuesday

Euro area inflation rose to another record high of 8.1% in May, versus 7.4% in April.

This should seal the case for policy normalization at the European Central Bank, which meets on June 9th.

Economists and markets expect a 25-bps hike in July but a very strong inflation print may fuel talk of a bigger move, which some ECB officials are already pushing for.

The United States, Canada and New Zealand have opted for larger 50-bps rate hikes, given inflationary pressures they had underestimated.

The ECB hasn't kicked off its hiking cycle yet and with inflation well above its 2% target, it may be time to get moving.

(5) China's Zero-COVID Policy Kills Off Growth Rate

The cost of China's zero-COVID lockdown strategy is clear, with Premier Li Keqiang decrying the economic damage done and pledging to salvage "reasonable" growth for this quarter.

China has announced a broad package of economy-boosting policy steps, and Li promised detailed guidelines for their implementation soon.

Yet many economists project a contraction this quarter after a raft of bleak data, including a soaring jobless rate.

The health of factories will be on display with the release of the forward-looking PMIs Tuesday and Wednesday.

And while Shanghai aims for a June 1st exit from a crippling, multi-week lockdown, Beijing is tightening controls.

No wonder markets appear to lack confidence: the CSI300 stock index is down -20% this year and the yuan is not far off its weakest levels since 2020.

Top Zacks #1 Rank (STRONG BUY) Stocks

Here are three worthy large-cap names to look into this week:

(1) Weyerhaeuser : This wood building products industry stock trades around $40 a share, making for a market cap of $28.9B. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of A.

(2) Delta Airlines : This major U.S. airline's shares trade at $41 now, making for a market cap of $26.2B. I see a Zacks Value score of B, a Zacks Growth score of A and a Zacks Momentum score of F.

(3) Monolithic Power Systems : This is an analog and mixed semiconductor stock. I see a whopping $422 a share price, making for a market cap of $19.7B. I note a Zacks Value score of F, a Zacks Growth score of B and Zacks Momentum score of B.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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