We’re buying 45 shares of Johnson & Johnson (JNJ) at roughly $158 each. Following Tuesday’s trade, Jim Cramer’s Charitable Trust will own 600 shares of J & J, increasing its weighting in the portfolio to about 3.27% from 3.03%. Wall Street’s selloff picked up steam Tuesday as last week’s hotter-than-expected inflation data has pushed bond yields higher and forced the market to recalibrate its Fed tightening expectations for the rest of the year. When the S & P 500 was climbing in January, part of the thesis was based on tame inflation data allowing the Fed to pause interest rate hikes in the spring and potentially start cutting rates near the end of the year. We’ve always been suspect about the cutting rates part, thinking the market was getting well ahead of itself. .SPX 3M mountain S & P 500 3-month performance After last week’s deluge of economic data, the Fed tightning outlook has become much more aggressive. The market is now pricing in 25-basis-point rate hikes in each of the next three Fed meetings. Based on recent Fed commentary these higher increases are expected to stay higher for longer to keep inflation in check. As rates climb, not only does it create real competition between stocks and bonds for investment dollars, but it also increases the risk of an economic recession. Whether you are in the soft landing economy or hard landing camp, a broad market-wide selloff like Tuesday with the S & P 500 down more than 1.5% (at the time this was written) is creating an opportunity to buy stocks of companies that are doing well and will continue to do so even in a recession. Many defensive names in health care and consumer staples have been thrown out this year and became a source of funds as the market rotated into high-growth tech stocks that were slammed in 2022. However, growing concerns of an economic slowdown could see the script flip quickly back into their favor. JNJ 3M mountain J & J 3-month performance That’s why we are viewing Tuesday’s downturn as an opportunity to make to add to our position in Johnson & Johnson , the health-care giant that’s separating its consumer business later this year. J & J has struggled this year partly on concerns around talc and mesh litigation. But as we said three weeks ago, we think the recent selloff is overdone . It has some hair on it due to litigation, but with a great balance sheet and a 2.85% annual dividend yield, J & J is the type of stock we like in this environment. (Jim Cramer’s Charitable Trust is long JNJ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Tuesday’s rough market gives us the chance to add to a health stock that’s right for this environment
Traders work on the floor of the New York Stock Exchange (NYSE) during morning trading on February 01, 2023 in New York City.
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