1 Stock To Buy, 1 To Dump When Markets Open: Exxon Mobil, Robinhood Markets

Jun 13, 2022

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Shares on Wall Avenue tumbled on Friday, with the main averages on the , , and struggling their largest weekly losses since January, after scorching scorching information fueled fears of extra aggressive rate of interest hikes by the Federal Reserve, elevating the dangers of recession.

S&P 500, NASDAQ, And Dow Chart

S&P 500, NASDAQ, And Dow Chart

Yr-on-year, U.S. client costs surged 8.6% in Might, the most important enhance since 1981.

The week forward is anticipated to be one other eventful one because the Federal Reserve prepares to make its broadly anticipated on Wednesday.

Whereas most a 50-basis-point fee hike, the percentages for a bigger 75-point transfer following Friday’s scorching CPI report.

Apart from the Fed, this week’s financial calendar consists of essential information, in addition to the most recent stories on and .

In the meantime, on the earnings docket, there are only a handful of company outcomes due, Oracle (NYSE:), Adobe (NASDAQ:), and Kroger (NYSE:).

No matter which route the market goes, beneath we spotlight one inventory more likely to be in demand and one other which may see additional draw back.

Keep in mind although, our timeframe is simply for the upcoming week.

Inventory To Purchase: Exxon Mobil

Oil and gasoline supermajor Exxon Mobil (NYSE:), which noticed its shares attain a brand new all-time excessive final week, may see additional features within the days forward as traders proceed to pile into the thriving  amid the livid rally in and costs.

Crude futures loved their seventh straight weekly achieve final week, with U.S. WTI and the worldwide benchmark each climbing above $120 a barrel, on the again of lingering fears of a possible disruption in provides in Europe and the Center East.

WTI And Brent Oil Chart

Shares of XOM have gotten off to considered one of their finest begins to a yr in historical past, surging to a recent document peak of $105.57 on Wednesday; they ended Friday’s session at $100.46.

At present ranges, the Irving, Texas-based oil-and-gas behemoth has a market cap of roughly $423.2 billion, making it one of many world’s largest power firms.

Yr-to-date, Exxon shares have soared 64.2%, simply outperforming the ’s roughly 18% decline over the identical timeframe, because the power large advantages from sturdy commodity costs, bettering international demand, and streamlined operations.

Traders have additionally been inspired by Exxon’s steady efforts to return more money to shareholders within the type of elevated inventory buybacks and better dividend payouts. Exxon at the moment pays a quarterly dividend of $0.88 a share, offering an annual yield of about 3.50%.

XOM Daily Chart

U.S. President Joe Biden on Friday , and Exxon Mobil particularly, for exploiting the present provide scarcity to spice up income.

Talking after a report confirmed inflation accelerating to a brand new 40-year excessive in Might, Biden stated Exxon has “made extra money than God” this yr and accused it of utilizing larger income to purchase again its inventory as a substitute of accelerating output.

“Why aren’t they drilling? As a result of they make more cash not producing extra oil. Exxon, begin investing and begin paying your taxes.”

Exxon pushed again on the President’s feedback, noting that it paid $40.6 billion in taxes in 2021, a rise of $17.8 billion from 2020, when it suffered huge losses of greater than $20 billion amid falling oil costs and weak worldwide demand.

Inventory To Dump: Robinhood Markets

There’s one other difficult week forward for retail buying and selling platform Robinhood Markets (NASDAQ:), whose inventory—which sank to its lowest stage on document on Friday—faces traders’ fretting over the adverse affect of a number of components plaguing the struggling retail brokerage agency.

The most recent adverse information got here after Securities and Trade Fee (SEC) chair Gary Gensler  final week aimed toward making the U.S. inventory market extra clear.

In what can be one of the substantial modifications, Gensler floated the concept of making an order-by-order public sale mechanism supposed to assist retail traders acquire the most effective pricing for his or her orders.

If enacted, Gensler’s sweeping measures to overtake the present market construction may immediately affect how brokerage companies earn income when processing retail commerce orders.

Robinhood beforehand warned that any potential SEC intervention in a fee association between brokerages and buying and selling companies—often called ‘payment-for-order-flow’ (PFOF)—may pose key dangers to its enterprise mannequin.

The apply, during which brokerage companies obtain compensation for guiding prospects’ inventory orders to completely different market makers for commerce execution, accounts for a big stream of Robinhood’s income.

HOOD Daily Chart

HOOD closed at a brand new all-time low of $7.81 on Friday. At present ranges, the Menlo Park, California-based fintech firm has a market cap of $6.8 billion.

Yr-to-date, Robinhood inventory has misplaced roughly 56% because the Fed’s plans to aggressively tighten financial coverage triggered a months-long selloff in shares of unprofitable know-how firms with sky-high valuations.

Much more alarming, shares of the net buying and selling platform are a whopping 90% beneath their document peak of $84.12 touched in August 2021.

On the whole, expectations of extra hawkish Fed coverage are likely to weigh closely on high-growth tech shares with lofty valuations, because it threatens to erode the worth of their longer-term money flows.

Taking that into consideration, shares of the beleaguered stock-and-crypto buying and selling app will doubtless stay weak to sharp swings within the days forward.

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