Market Wrap-Up for Apr.22 (HAS, CAT, ABBV, GE, MCD, KMB, more)

The market was able to shake off the subpar morning session and saw the averages close in the green ahead of what will be another earnings-filled trading week.

We had a handful of earnings moving the tape with buyers prevailing to lift names like Hasbro (HAS), Halliburton (HAL) and Caterpillar (CAT), which lowered its profit outlook. Wall Street analyst calls had an impact as well. On the positive side, V.F. Corp (VFC) and AbbVie Inc. (ABBV) ended higher on bullish commentary. On the downside, cautious analyst commentary weighed on shares of General Electric (GE), McCormick & Co. (MKC), McDonald’s (MCD), and Kimberly-Clark (KMB).

Wall Street and Hedge Funds Loading the Boat on Real Estate

Plenty of anecdotes are coming out of the real estate rebound and we can’t look past the Wall Street effect as a major component of prices bouncing in the hardest-hit areas. With the Federal Reserve giving money out to banks at literally 0% interest, financial institutions are deciding they want to be real estate owners by bidding on hundreds of properties a day. The game plan is to rent the homes out, whether it is by finding qualified tenants or going through government assistance programs (such as Section 8) to help subsidize low-income families.

Market experts are trying to weigh the long-term outcome for this new breed of would-be real estate barons. Some believe rising home values will make home ownership a tougher route for many if home inventory continues to be scooped up in droves. The problem I see is when we see false starts in areas where little reality exists for a sustained rebound. Often times, insiders (politicians) and their friends will get wind of potential development plans and will be there to cash in on hopes of things will soon turn around by buying up land/property in those areas that may be at the heart of the plans.

It’s hard to predict how things will play out, but when you get a growing number of big money firms playing the same strategy, it doesn’t take much to eventually see big money leave in droves as quickly as it came in. It’s not often that hedge funds and big money players stick to a certain strategy for the long term. The regular buyers (mom and pop/small investors) who come in before that storm arrives could easily stand to be the ones getting hit with the brunt of the damage.

I would imagine the few areas that have seen the least affects from the real estate downdraft will remain to be the belles of the ball when it comes to seeing the biggest returns over the course of time. That doesn’t mean money can’t be made elsewhere, but timing will have to be near perfect when you do take the shot. Knowing there will be buyers there at the end is the ultimate justification. If Wall Street screws it up, they can absorb it — but it’s not so easy for the rest of us.

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I hope everyone had a chance to check out our Premium members-only weekend articles, including new features that highlight some of the biggest winners and losers from the week that was, such as analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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