For nearly two years, AI has been the word that’s helped push many tech companies higher, particularly large-cap companies. That’s because those firms have been at the forefront of AI spending. For large enough companies, spending a few billion to build out AI is no big deal. While the market is shifting towards other parts of the AI story, many big-tech companies can still trend higher for a more fundamental reason. They generate massive amounts of cash. If that money isn’t being spent on AI, it can go elsewhere. Dividends, share buybacks, acquisitions, or growing the core business ...

Lower interest rates mean it costs less for companies to borrow. And that it’s easier for them to expand operations. That’s why the market has taken off as it’s clear that companies will look to leverage up as the cost to borrow goes down. Combining that with sectors that are seeing increased spending could make for a winning investment strategy in the months ahead. With a construction, manufacturing, and infrastructure boom underway, a few possible winners look likely. One contender for a winner is Caterpillar (CAT). The producer of heavy construction machinery is cyclical. But they...

Interest rates are finally starting to go down. That means the cost to borrow will decline, benefitting highly leveraged companies. But the cost to lend will also decline, meaning that fixed-income investors will get paid less for their holdings. For long-term bondholders, the price of the bond will rise to match interest rates. This is a concept known as duration. But short-term bond holders don’t have exposure to duration, and will see their bonds roll over at a lower interest rate. That’s bad news for companies loaded up with U.S. Treasury notes, which most companies use as a subs...

Investors love tech stocks, but have started to branch out to other sectors, such as utilities, telecom, and consumer stocks in recent months. Those sectors could continue to help lead the overall market higher into 2025. Meanwhile, some sectors are starting to look oversold. They’ve simply been too far out of favor with the market for too long. They could be best poised for the strongest returns over the coming months. Right now, energy looks like an unloved part of the market. It’s below its historic level as a percentage of the overall economy. And while oil prices have been lackl...

Many big tech stocks have led the market higher over the past two years. However, not all tech stocks are alike. Investors have been betting on plays with fast growth now. But as the market shifts, looking for consistent growth may be a better option for investors. That’s because the spending growth on AI is likely to start slowing in 2025. The big spending now should decline as companies look to integrate new AI tools and reassess their needs from there. So when the market next pulls back and looks fearful, the one tech play investors should target first isMicrosoft (MSFT). The comp...

The holiday season is when retail stocks have their best performance of the year. That’s because holiday sales provide retailers with the chance to see their biggest profits. However, consumers remain cautious after years of inflation. For a retailer to have a good year, it will need to offer bargains this year. Making value a priority may not mean a big profit margin. But it will mean solid revenues. And it will likely mean that those who don’t offer enough values will fare comparatively worse. Among the retail giants,Target (TGT) has demonstrated a willingness to cut prices. That’s...

Investors have been concerned about AI spending in the most recent earnings season, even as many big-name companies reported big spending on AI projects. While that put tech stocks in a funk, last week’s statement from Nvidia’s (NVDA) CEO noted that the AI trend is alive and well. That said, the market is still willing to punish companies with short-term concerns over AI spending or results. That can create an opportunity for investors looking to buy ahead of a year-end rally. For instance, software developer Adobe (ADBE) reported earnings Friday. While expectations were beaten, fear...

Interest rates have already started to decline ahead of the first rate cut by the Federal Reserve later this month. That’s starting to cause a market shift, allowing interest-rate sensitive companies to move higher. As rates trend lower, companies will benefit. They’ll be able to borrow and lower costs. And for some companies, it can also mean that their dividend yields will look more attractive relative to bonds. That’s the case with real estate investment trusts, or REITs. They’re required to pay out 90% of their earnings as dividends. That tends to result in high yields. With r...

Momentum investors operate under the assumption that a stock heading higher (or lower) will keep going in that direction. Until there’s a sign of a trend change, that’s a reasonable trading strategy. One item that can help momentum plays trend higher is their inclusion in a stock market index. That’s because the addition to an index means that the index has to buy shares. And since index investing is popular, millions automatically add to an index position with retirement plans such as a company 401(k). The biggest index that can move a stock is the S&P 500. Made up of the top 50...

The housing market has largely been frozen over the past two years. Rising interest rates made it unattractive for those who locked in a low mortgage rate to move. And the higher costs kept potential homebuyers on the sidelines. The thaw is starting. Interest rates are already coming down ahead of the Federal Reserve’s action. And as the housing market thaws, home improvement projects and spending may soar. That bodes well for several companies. For instance, paint giant The Sherwin-Williams Company (SHW) is already up 35% over the past year, slightly outperforming the stock market. ...