Stocks: The Good, The Bad and The Ugly

A few themes stick out

Good morning advisors!

I waited to send this out until this morning’s CPI number came out, but it looks like we are in for another rough day as numbers were hotter than expected across the board. Where we close is always more important than the initial move, but at first glance we have:

• Stocks lower, with the Nasdaq leading to the downside (-3% premarket)

• New highs for every part of the interest rate curve, with the 10-year yield up above 4%

• Dollar spiking by 1%
  

The trends remain the trends, as illustrated by this chart that appeared in this week’s Monday Morning Playbook.

With all that said, today’s edition of Stocks: The Good, The Bad, and The Ugly is going to focus on several themes that stood out as I was reviewing individual equities.

• REITs are getting crushed

• Investors don’t care that semiconductors are “in everything”

• The charts don’t suggest the consumer is out of the woods yet

• The communications sector remains a disaster

• The ARKK stocks are in trouble again

• Surprising amount of relative strength within industrials

• Opportunities can be found in healthcare

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*All charts are through Wednesday’s close, but I’ve added a few comments throughout based on the CPI reaction

REITs are getting crushed
*XLRE -2% premarket

AVB: AvalonBay Communities

Rents follow home prices, and ever since Jerome Powell said that the housing market needs a “difficult correction” the apartment REITs have gotten crushed. AVB is a prime example, breaking support and hitting 52-week absolute and relative lows almost immediately after those comments.

PLD: Prologis

Prologis’s market capitalization is getting smaller by the day, but it just surpassed American Tower to become the largest REIT in the sector. Unfortunately for ETF-only investors, the stock is a disaster and the breakdown below $107 suggests any rallies should be sold.

Investors don’t care that semiconductors are “in everything”
*Semiconductor ETF SMH set to open 3.7% lower

NVDA: Nvidia