Updated quantity ratings on 125 stocks

The first half of September was tough for the stock market. Ahead of the Federal Reserve’s decision on Wednesday to cut key interest rates by 0.50%, the S&P 500 and NASDAQ fell slightly in September, while the Dow rose 0.1%. Following the rate cut, the S&P 500, Dow and NASDAQ gained 1.4%, 1.6% and 1.5%, respectively, and are now up for the month.

The good news is that the strength should continue as we enter the final trading days of September – and into the third quarter, thanks to a phenomenon known as quarter-end window dressing.

Basically, the end-of-quarter showcase is when institutional fund managers make their portfolios “pretty nice” for their clients. To do this, he usually cuts the weakest stocks and adds a lot fundamentally superior stocks – like the kind we own Discovery Actions. This tends to create forced buying pressure and build up stocks.

However, the market will face some key tests.

On Wednesday, we will have data on new home sales. Then on Thursday, we’ll take a look at jobless claims and gross domestic product (GDP). But on Friday, all eyes will be on Friday’s personal consumption expenditure index (PCE) report for August. Economists are looking for PCE to show an increase of 0.1 percent in August, compared with July’s 0.2 percent increase or 2.3 percent year-over-year.

Core PCE, which excludes food and energy, is the Fed’s preferred inflation gauge. And economists will be looking for further progress on this front before declaring total victory.

The current consensus is for core PCE to show a 0.2% increase in August, which would be in line with July, or 2.7% year-over-year.

I should also add that we will have several Fed Chairs speaking this week, which could distract Wall Street. Personally, I’ll be paying close attention to their thoughts on the recent cuts as well as the state of the economy.

In fact, Minneapolis Fed President Neel Kashkari published an essay in which he said he supported a full 1 percent cut in the Fed funds rate this year.

Specifically, Kashkari said, “The balance of risks has shifted away from higher inflation and the risk of further labor market weakness, justifying a lower federal funds rate.”

This is important, folks. Kashkari has been one of the most sought-after members of the Federal Open Market Committee (FOMC), so his change of position is a big deal.

I suspect other Fed officials will be out this week to support the Fed’s interest rate policy.

Overall, I think Wall Street got exactly what it wanted: a big 0.5% key rate cut, dovish comments from the Fed, and a positive dot plot signaling future rate cuts. All this is very optimistic for the stock market.

This week’s ratings are changing

Now, before I get into this week’s rating changes, I want to briefly introduce my new and improved stock ranking tool on a fundamental and quantitative basis: Stock grader (subscription required).

Formerly known as Portfolio Grader, our team spent months upgrading the entire experience, making it more attractive and user-friendly.

I plan to spend some time showing you this new-look tool and some of its features in Thursday’s section 360 Square.

But in the meantime, to help you prepare for what should be an upbeat week for the market, we’ve taken a fresh look at the latest institutional buying pressure and the financial health of each company. I decided to revise my Stock Grader recommendations for 125 large chips. Of these 125 stocks…

• Eighteen stocks were upgraded from Buy (B rating) to Strong Buy (A rating).
• Twenty-three stocks were upgraded from a Hold (C rating) to a Buy (B rating).
• Seventeen stocks were upgraded from Sell (D rating) to Hold.
• Twenty-eight stocks were downgraded from Buy to Hold.
• Twenty-two stocks were downgraded from a hold to a sell.
• And two stocks were downgraded from a sell to a strong sell (F rating).

We’ve listed the top 10 stocks rated as Strong Buys below, but you can find a more comprehensive list – including fundamental and quantitative scores on all 125 stocks – here. Chances are you have at least one of these stocks in your portfolio, so you may want to whittle down this list and adjust accordingly.

Take advantage of the Fed Pivot

Now, the reality is that we have been banging on the table for a bigger rate cut for some time. And while I’m glad the folks at the Fed have come around to my way of thinking, I’m even more excited for what’s to come…

As I’ve been saying for months, once the Fed starts cutting rates, it will remove a lot of uncertainty from the market. Well, the time has come, folks.

And now, as the Fed “pivots” toward accommodative interest rate policy, it will mark the end of the $8.8 trillion “cash bubble.” That means all that money just sitting on the sidelines will be released into the market.

Couple that with the fact that we’re in end-of-quarter window shopping season and fundamentally superior stocks should benefit the most.

To access my full briefing on this cash bubble – and how you can take advantage – go here now.

(Already a Discovery Actions subscriber? Click here to log in to the members-only website.)

Sincerely,

Louis Navellier

Editor, 360 Square

P.S We’ve seen chaos in the markets since 2020… And despite last week’s rate cut, several headwinds — wars in the Middle East and Ukraine, elections and more — are still swirling around the markets. That’s why tonight at 8:00 PM ETmy InvestorPlace colleague Eric Fry and a special guest of his will sit down to discuss how to prepare even for More the ensuing chaos. This event is only a few hours away. So, click here now to reserve your spot now.

The Publisher hereby discloses that, as of the date of this e-mail, the Publisher owns, directly or indirectly, the following securities that are the subject of commentary, analysis, opinions, advice or recommendations in, or are otherwise referred to in, the essay presented above down:

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