Stock market news, Nov. 26, 2014: The stock market today follows a near-record session from the Dow and the S&P 500 yesterday.
- Stock Market Today Reacts to Deere Earnings (NYSE: DE) and This News
- Today's Stock Market News and Earnings Calendar
- Three Stocks to Buy in Next Year's Most Promising Sectors
- Agricultural Stocks: Deere & Co. (NYSE: DE) and AGCO (NYSE: AGCO) Are Poised to Reap Gains
Today's stock market news, Feb. 12, 2014: The Dow Jones Industrial Average soared more than 192 points on Tuesday after new Fed chair Janet Yellen stressed that monetary policy is unlikely to change under her leadership. The Dow ticked above 16,000 for the first time since Jan. 24. The S&P rose 1.1% to close at 1,819.75 and the Nasdaq increased 1% to 4,191.04.
Overall, the markets are expected to have another positive year.
A survey of 10 top financial strategists by Barron's projects the Standard & Poor's 500 will close at 1,562 in 2013, a 10% gain from current levels. (By the way, last year's picks outpaced the broader index by 6%.)
That would follow modest gains in 2012 of 13.5% for the S&P 500 and 8% for the Dow Jones Industrial Average.
For next year, Wall Street's top guns predict certain sectors of the market - technology, industrials, and energy - will lead the charge higher. Companies in more defensive sectors like consumer staples, telecoms, and utilities, will be laggards.
So let's take a closer look at three stocks to buy from among these favored sectors that should be an excellent place for your money in 2013.
Stocks to Buy in 2013: Cheap TechTech stocks are hugely profitable and as a group currently carry a forward P/E ratio of about 11.
That's cheap versus historical levels.
Tech is also a bellwether for when companies start to invest capital.
"When we get an upturn in capital expenditures, it will show up in tech first," Barclays' Barry Knapp told Barron's.
One stock to buy that has a rock solid balance sheet and a mountain of cash is Cisco Systems Inc. (Nasdaq: CSCO).
Once the world's most valuable company with a market cap of $500 billion, Cisco's shares sank sharply when the tech bubble burst in 2000.
And the stock is still dirt cheap, trading around $20 a share, roughly 10 times next year's earnings. Plus, the company is sitting on more than $48 billion in cash, worth about $9 a share.
With a dominant market share of 60%, CSCO is the de facto choice in the switching market.
But there are two reasons why investors shouldn't be so quick to abandon the sector.
In fact, two stocks, Deere & Co. (NYSE: DE) and AGCO (NYSE: AGCO) are poised to reap gains now that ag stocks have pulled back
- Much of the pessimism surrounding crop prices is overdone.
- Many ag stocks are still excellent long-term plays - despite any short-term trepidation.
It's true that farmers currently are planting more staple crops in an effort to exploit high prices. But as we've seen in just the past few months, floods, droughts, and rapidly rising demand could easily intercede to keep prices near record levels.
The most important crop to watch right now is corn.
Preliminary USDA data suggest that farmers this year will plant the biggest corn crop since World War II. However, that's exactly what will be needed, since corn is facing the greatest supply constraints of any staple crop.
Indeed, even a bumper crop will first have to compensate for the shortages of the current crop year, which are significant. By this year's autumn harvest, global stocks of corn as a share of consumption will have fallen to the lowest level since 1974.
"There has been no rebound in global corn stocks," Ed Allen of the USDA's economic research service told the Financial Times. "This has maintained very tight markets for corn."
And while global corn production is expected to rise, there's still a chance bad weather will damage the harvest just as it has in the past two years.
Last year, wet weather early in the season delayed planting while hot weather in the summer scorched young stalks. That contributed to two consecutive years of shrinking supplies.
Analysts say a third straight year would be rare, but according to economists at the University of Illinois, there is a 40% chance corn yields will fall short in any given year.
"The odds slightly favour a corn yield above trend in 2012, but there is certainly precedent for another year below trend," the economists wrote last month. "More specific expectations about the 2012 average yield will depend on how the planting and growing season unfolds."
Good News for Agricultural StocksCorn isn't the only crop facing supply constraints, either.
January droughts in Argentina and Brazil reduced global soybean production by 7.2% this year. And with farmers focusing on corn there's less land available for soybeans. The USDA anticipates soybean production will fall by 12.7 million metric tons this year.
On Oct. 1, the start of the next season, soybean inventories will be 20% lower than they were last year, according to Jefferies Bache LLC. As a result, soybean prices, which are up nearly 9% year-to-date, will gain another 6.7% by June, the New York-based commodities trader estimates.