Under Biden Some Stocks Win, Others Will Fall Back

After a negative performance in 2020 the energy sector has accelerated based on President Biden’s energy actions, including the suspension of new oil and gas permits on federal lands and waters and the cancelation of the Keystone XL oil pipeline project.

Due to supply and demand the price of gas shot up $0.50 per gallon, providing favorable earnings sentiment. Contrary to the big performer last year, technology and its high digital demand has cooled down.

Tech’s performance during the Biden administration is at the bottom of the pack, though analysts still favor the technology sector for long-term goals. Just for the short cycle swing momentum, however, technology has diminished.

Consumer discretionary stocks appear expensive based on all metrics. GDP, retail sales, and new home sales reports are at their best in decades and are starting to peak.

Strength in the services sector was driven by increasing vaccinations and gradual return to normalcy, as evidenced by solid quarter-to-quarter growth in air transportation (+11.5%), accommodations (+9.5%), and food services (+5.8%).

Recent year-over-year readings were strong: The producer price index is up 3.1%, the consumer price index up 1.6%, import prices up 6.9%, and export prices up 9.1%. Durable goods orders rose by 0.5% during the month, against economist estimates for a 2.3% increase.

Similarly, manufacturing activity has created a positive economic backdrop for two sectors, respectively, industrials and materials, which are seeing upbeat momentum and posting modest returns.

Financial institutions are getting much support from the U.S. Small Business Administration from the second-draw PPP Loans as banks are paid a fee for distributing funds to small businesses and because it increases their customer base.

Corporate tax increase?

Rising interest rates have strained momentum and sentiment in utilities. However, these stocks still deliver a solid return and dividend so investors can feel good by having these positions within their portfolios.

In addition, healthcare appears cheap relative to the S&P 500. The Covid 19 vaccine has provided a lot of positivity in this sector.

While the S&P 500 continues to hit new all-time highs on much of the same news, the big question is what happens when higher interest rates start to put pressure on equities? Or when  Biden signs an increase in the corporate tax rate from 21% to 28%?

A 28% tax rate would clip corporate earnings by 9% in 2022. Investors thus should brace for a little more market volatility and make necessary rotations within their portfolios.

As you know it’s not easy to predict the future. Strategic asset allocation sets the foundation for your achieving your goals and objectives and diversification is the cornerstone for creating efficient and optimal portfolios.

As well all know too well, investing comes with uncertainty and that makes diversification and discipline even more important. Having a diversified portfolio within and across asset classes is the key to long-term success.

Recommended Articles

Live Near Water? You Probably Paid Too Much for Your House. Here’s Why (Map)

Even a cynic recognizes that opportunity is a key to prudent business timing. Consider home buying. If you’re in the market for a new home, and are informed and discerning

3 Reasons to Should Avoid Life Settlement Policies

Most Americans don’t take life insurance for granted because almost one out of every two Americans don’t have it. According to the Insurance Information Institute, only about 54% of Americans

Feeling Hangry? How to Avoid Food-Related Mood Swings

Food that you eat is processed into simple sugars, free fatty acids and amino acids. The nutrients are moved into the bloodstream where they are assimilated by organs, tissues, and

How to Put Your Investments On Autopilot — and Win

Are you committed to investing a part of your monthly income towards retirement? You can insulate your financial future against unforeseen emergencies and economic risks if you use an automatic

Best Time to Sell or Buy a Home? It Depends…

When's the best time to buy or sell a home? That's a great question. A lot depends on who you are, seller or buyer. Traditionally, the best time of year

6 Sneaky Habits That May Be Causing Your Overeating

Overeating? Many people vastly underestimate how many calories they consume in a day. Even if you believe you restrict your daily calorie consumption, you may be consuming more calories than

How Shark Tank Judge Barbara Corcoran Nearly Lost $400,000 — Just by Reading an Email

According to a 2017 FBI Internet Crime Report, individuals and companies lost over $5.5 billion between 2013 through 2017 due to email phishing scams. Email phishing scams are deceptive emails

5 Reasons a Wrist Watch Can Be Worth More Than a Luxury Car — and Even Retain More Value Over Time

Placed side by side, a Rolex White Gold Presidential Oyster Perpetual wristwatch, is not much larger than a typical, multi-function digital timepiece made by Casio. Yet one costs over $7,000;

Biggest and Smallest National Gaps Between Rich and Poor (and Where America Ranks)

In the United States, the richest 1% controlled more than 40% of the wealth in 2016. The last time wealth inequality gaps were this wide was during the Great Depression.

3 Best Travel Websites That Save You Money

There’s a lot of travel sites out there and they all seem very similar. If you are planning for spring break in 2022, next year’s summer vacation or just getting

35 Healthy, Natural Foods You Should Be Eating

Did you know that the healthiest foods in the world are actually highly affordable, simple foods that can be found in any supermarket? The most healthy foods you should be

5 Ways to Boost Return in Your Investments While Actually Cutting Risk

Are you looking for ways to earn higher returns without risking it all? When it comes to investing your money today, there are plenty of options that promise attractive returns.