While the stock market stands at crossroads with the Fed’s next move and with uncertainty still hanging in the air, it could be ideal to invest in fundamentally sound stocks such as DENSO Corporation (DNZOY – Get Rating), Dynatrace, Inc. (DT – Get Rating), and Daito Trust Construction Co.,Ltd. (DIFTY – Get Rating) that have shown resilience through this past earnings season and look poised for further growth.
In recent weeks, several Fed officials have signaled that the Fed’s focus remains primarily on quelling inflation, which is still running at elevated levels. Last week the Commerce Department reported that the core Personal Consumption Expenditures (PCE) price index rose 0.4% in April and 4.7% from a year ago. Despite the higher inflation rate, consumer spending jumped 0.8% for the month, while personal income increased 0.4%.
With a strong labor market and a broadly healthy economic backdrop, the report has reinforced the probability that interest rates could stay higher for longer. As a result, the market is pricing another quarter-percentage-point interest rate hike at the June meeting, bringing the federal funds rate to 5.25% – 5.5%.
On the other hand, amid recent uncertainty in the regional banking sector and the credit crunch worries, some investors remain hopeful that a pause in rate hikes might still be on the cards. However, the Fed’s next move in interest rates largely depends on the U.S. nonfarm jobs report and CPI inflation data for May, slated to release in the coming weeks, both of which are expected to show some cooling.
Against this backdrop, adding quality stocks…
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