Investors seeking safety should consider these 3 stocks now.
Recession fears went unabated Thursday as yields on U.S. Treasuries continued to fall, with yields on the 10-year U.S. Treasury note falling to 2.34%, a 15-month low.
“The rapid and persistent decline in bond yields is unnerving investors about the economic outlook,” said Jasper Lawler, the head of research at London Capital Group.
As the shadow of yield-curve inversions—a reliable leading indicator of looming recession—continued to spook the market, new developments in the trade war talks between the U.S. and China helped to steady stocks. According to Reuters, U.S. officials have said that China may make concessions on forced technology transfers in order to come to a truce.
For investors seeking safety in the current environment, Oppenheimer’s head of technical analysis, Ari Wald, says that three tech sector plays could provide shelter.
“Key for us is seeing this drop in interest rates the world over and signaling the threat of a slowdown in the global economy,” Wald said to CNBC on Monday. “We expect a premium to continue to be placed on these higher growth, large cap companies, and this includes a lot of your popular large cap tech names like Apple (NASDAQ: AAPL).”
Apple has broken out this month after having underperformed the market in the first months of 2019. The stock is up 9% for March, outpacing the S&P’s less-than 1% gain. However, Apple shares have come under pressure this week after the iPhone maker announced a new slate of subscription services, including a streaming service and a new credit card.
“They’re planting flags in markets that are fairly mature and so I think that’s going to be challenging for Apple,” said Gina Sanchez, CEO of Chantico Global. “I do think that Apple has to make a pivot, but … I think this is going to be a brand challenge for Apple if ever there was one.”
Wald says that Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) could also be hedges against any tech squeeze.
“For Microsoft, here’s a stock coming off a new cycle high in this mixed and questionable market tape. It held up better through the Q4 volatility, led on the way back higher as well, we see this as a sign of relative strength. It scores well in our momentum work,” Wald said, noting that shares should find support at $114.
As for Amazon, Wald says it’s “a stock that’s probably the most tactical it’s been in years, and we say this looking at the stock’s weekly MACD (moving average convergence divergence indicator) inflecting positively from its most oversold condition since 2014 with a long-term uptrend that’s still intact as well.”
The MACD indicator is pointing to a change in trend as it has been trending upward since early this month.
Microsoft is up 4.37% for the month and 15% so far this year, while Amazon is up 8% for March and just over 18% year-to-date.
“Broad-based strength, relative strength, you still want to own these high-growth companies,” Wald said.