The market has been on a wild ride the last few weeks, and this week has been especially challenging.
Futures on the S&P 500 are headed for their worst week since the global market meltdown in December. The Dow Jones hasn’t seen the kind of losses its seeing now in eight years as it heads toward finishing its fifth negative week in a row.
On Thursday, President Donald “Tariff Man” Trump issued a 5% duty on all Mexican imports starting June 10 and rising to 25% in October unless Mexico halts “illegal migrants” heading to the U.S.
“We are seeing a Trump who is going all-out,” Kay Van-Petersen, global macro strategist at Saxo Capital Markets, said. “This raises the bar not just for Mexico and Canada, but also for China.”
Trump’s plans for Mexico and the ongoing trade war with China has left markets set for a turbulent end to an otherwise painful month for global equities. And according to Mark Tepper of Strategic Wealth Partners, the market has hit a wall and will continue to churn around these levels without help.
“We’ve been in a bull market now for 10 years and the consumer has carried all of the weight but in order for the cycle to extend itself, we need [capital expenditures] and as long as trade is a concern, the CEOs aren’t going to be confident enough to actually invest in capex,” Tepper said to CNBC.
“Fear [is] starting to escalate a little bit,” said Newton Advisors technical analyst Mark Newton last Thursday. “You see the put to call starting to rise a little bit. A number of stocks hitting new 52-week lows also so this isn’t being unnoticed by investors. People already are under a sense of strain. If we really start to sell off under 2,800, we’re going to see fear spike very rapidly.”
While the S&P closed up 0.21% today, it closed below 2,800 at 2,788.86, a level not seen since March.
But as the market struggles, one sector has been making a comeback.
“We’re really trying to target good companies that are big players in investible themes, and health care as a sector has struggled this year, but it’s been resilient over the past month,” Tepper said. “It’s outperformed pretty much everything else.”
As for companies that could be interesting opportunities for investors, there are three that Tepper has his eye on.
“When you look at medical devices and equipment, there’s a hug opportunity there,” he said. “Medtronic (NYSE: MDT) just had a great quarter. Intuitive Surgical (NASDAQ: ISRG), a big player in robotics that’s generating a ton of recurring revenue, it pulled back after expenses were a bit high last quarter but that should actually be a positive over the long run and Abbott Labs (NYSE: ABT), they are big players in diabetes management with their fingerstick-free glucose monitor and so we like all these companies.”
This week, Medtronic is up nearly 5% while Abbott is up 0.34%. Each of the three stocks have a consensus Buy rating from analysts and they say each have upside ahead.
The average price target for Intuitive Surgical would see the stock 21% higher over the next twelve months, while analysts say Abbott has 4.56% upside ahead and say Medtronic could see possible upside of nearly 12% over the next twelve months.