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April 6, 2017, 9:25 a.m. EDT

As the S&P 500 hits turbulence, here’s a corner of the stock market to hide in

Critical information for the U.S. trading day

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By Victor Reklaitis, MarketWatch


Everett Collection
Turbulence?

It easily could be a tough day for stocks, as traders are worrying about “Spar-a-Lago” and moping about yesterday’s ugly finish.

Why exactly does the stock market keep wallowing below its March 1 peak?

Analysts have a list of potential culprits: the Donald Trump-Xi Jinping summit that starts today in Florida, fears that tax cuts won’t come soon, and the Fed’s plans to pare back its stockpile of bonds. Jefferies strategists, however, sound tired of the finger-pointing.

“Just as the rise in markets can be attributed to a whole host of reasons, so can declines,” say chief global equity strategist Sean Darby and his colleagues.

Nonetheless, they offer “the best excuse” for the recent selling — as well as where investors ought to hide out now, for our call of the day .

“Last quarter’s rally was built on large-cap, expensive stocks advancing at the expense of small-cap, cheap stocks,” say the Jefferies strategists. Now investors are uneasy about the even higher share prices for those big and costly plays, they suggest.

That doesn’t mean stock bulls need to cash out completely, they say, even as they warn that the “technical condition” of the S&P 500 looks precarious.

“The bottom line is that monetary conditions remain easy, the global economy was expanding well before Trump got elected, and real interest rates are negative,” Darby & Co. write. So all things considered, investors “should be rotating into lower-priced stocks which are experiencing positive earnings revisions.”


Jefferies

The Jefferies team doesn’t name individual stocks in their note. But if you want to bet on those little and inexpensive stocks that the strategists have flagged as unloved, there’s an ETF for that. A bunch actually, such as the Vanguard Small-Cap Value ETF /zigman2/quotes/203042913/composite VBR -2.34%  and the iShares Russell 2000 Value ETF /zigman2/quotes/202341160/composite IWN -2.37%  .

Other pundits have also been highlighting the rough going for the small fry /zigman2/quotes/209961116/composite IWM -2.38% , saying it’s a possible red flag for the overall market — or at least great factoid fodder:

Key market gauges

Futures for the Dow  , S&P 500   and Nasdaq-100  are modestly higher, after the Dow /zigman2/quotes/210598065/realtime DJIA -1.62%  , S&P /zigman2/quotes/210599714/realtime SPX -1.72% and Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -1.80%  all sold off into yesterday’s close.

It’s been mostly selling in Europe /zigman2/quotes/210599654/delayed XX:SXXP -2.34% and Asia. Gold is gaining, and oil is also rising. The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.0309%  has bounced back from losses that came as ECB President Mario Draghi revealed a four-point checklist for when it’s time for a rate hike.

See the Market Snapshot column for the latest action.

The buzz

Will Trump and Xi share a bucket of KFC and cheer Yum China’s /zigman2/quotes/208495167/composite YUMC -2.10% latest earnings? They almost certainly won’t play golf at “ Spar-a-Lago ,” aka the new president’s most important meeting yet . Xi, that Communist Party animal, has been known to go for a beer.

See: Why investors are fretting over the Trump-Xi meeting

Bed Bath & Beyond /zigman2/quotes/209801102/composite BBBY -5.92%  is on track for an up day following its quarterly results late yesterday.

Aussie regulators are chewing out Apple /zigman2/quotes/202934861/composite AAPL -1.51%  over “Error 53” iPhone shutdowns.

CarMax /zigman2/quotes/204412041/composite KMX -0.35%  and Constellation Brands /zigman2/quotes/207737284/composite STZ -2.25% are among the companies that posted earnings before the open.

/zigman2/quotes/203042913/composite
US : U.S.: NYSE Arca
$ 146.47
-3.51 -2.34%
Volume: 998,092
Sept. 23, 2022 4:00p
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/zigman2/quotes/202341160/composite
US : U.S.: NYSE Arca
$ 132.98
-3.23 -2.37%
Volume: 1.37M
Sept. 23, 2022 4:00p
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/zigman2/quotes/209961116/composite
US : U.S.: NYSE Arca
$ 167.31
-4.08 -2.38%
Volume: 40.34M
Sept. 23, 2022 4:00p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
29,590.41
-486.27 -1.62%
Volume: 320.97M
Sept. 23, 2022 5:04p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,693.23
-64.76 -1.72%
Volume: 2.22B
Sept. 23, 2022 5:04p
loading...
/zigman2/quotes/210598365/realtime
US : Nasdaq
10,867.93
-198.88 -1.80%
Volume: 5.19B
Sept. 23, 2022 5:16p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
390.40
-9.36 -2.34%
Volume: 0.00
Sept. 23, 2022 11:03p
loading...
/zigman2/quotes/210561242/realtime/sampled
US : Tullett Prebon
0.9693
-0.0003 -0.0309%
Volume: 0.0000
Sept. 23, 2022 4:59p
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/zigman2/quotes/208495167/composite
US : U.S.: NYSE
$ 46.60
-1.00 -2.10%
Volume: 1.46M
Sept. 23, 2022 4:00p
P/E Ratio
26.41
Dividend Yield
1.03%
Market Cap
$19.55 billion
Rev. per Employee
$21,424
loading...
/zigman2/quotes/209801102/composite
US : U.S.: Nasdaq
$ 6.67
-0.42 -5.92%
Volume: 9.63M
Sept. 23, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$533.32 million
Rev. per Employee
$230,543
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/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 150.43
-2.31 -1.51%
Volume: 96.03M
Sept. 23, 2022 4:00p
P/E Ratio
24.86
Dividend Yield
0.61%
Market Cap
$2417.52 billion
Rev. per Employee
$2.52M
loading...
/zigman2/quotes/204412041/composite
US : U.S.: NYSE
$ 79.49
-0.28 -0.35%
Volume: 2.52M
Sept. 23, 2022 4:04p
P/E Ratio
13.49
Dividend Yield
N/A
Market Cap
$12.65 billion
Rev. per Employee
$1.03M
loading...
/zigman2/quotes/207737284/composite
US : U.S.: NYSE
$ 231.26
-5.33 -2.25%
Volume: 1.38M
Sept. 23, 2022 4:04p
P/E Ratio
37.66
Dividend Yield
1.38%
Market Cap
$44.52 billion
Rev. per Employee
$915,890
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