The Market Is Back, for Now
The market has recovered in a big and fast way over the past week. Are we out of the woods?
What a difference a week makes. Things were frog ugly at the beginning of last week. We were approaching a trade war with the whole world. The S&P 500 came within a whisker of bear market territory (down 20% or more from the high on a closing basis). In fact, it hit the 20% mark down from the high on an intraday basis twice. Then last Wednesday happened.
The Trump administration announced a 90-day pause on reciprocal tariffs for most countries while new arrangements are negotiated. The market exploded higher. On April 9th, the S&P closed 9.5% higher for the day. It was tied for the eighth biggest up day in history, dating back to 1928. The market closed significantly higher for the week and is up again so far this week. We’ve moved comfortably away from bear market territory.
We may have seen the low for this cycle. There is reason for hope. Approximately 130 nations are willing to negotiate. It seems the most likely outcome at this point is that many countries will reset trade barriers in a way that is more favorable to the U.S. Of course, China is still playing hardball, at least for now. But it is increasingly likely that, several months from now, this country has more favorable trade arrangements. The market also tends to like tax cuts, deregulation, and ramped-up energy production.
But headlines seem to change every day. A bad headline could easily send the market reeling again. However, it is looking increasingly like we may be past the worst of the tariff uncertainty. While it might be a while before there is sufficient clarity for the market to muster lasting upside traction, a new low in the market seems unlikely unless the tariff situation deteriorates from here.
We might not be out of the woods yet. There could be a big fight with Europe. The China fight could escalate. But there is also upside potential. A deal could be announced with China. Negotiations could go well with other countries.
Despite the continuing near-term uncertainty, it is more likely that stock prices are a lot higher by the end of the year.
Recent Activity
March 19
Brookfield Infrastructure Partners (BIP) – Rating change “BUY” to “HOLD”
March 26
AbbVie Inc. (ABBV) – Rating change “BUY” to “HOLD”
April 2
AGNC Investment Corporation (AGNC) – Rating change “BUY” to “HOLD”
April 9
Ally Financial Inc. (ALLY) – Rating change “BUY” to “HOLD”
Qualcomm Inc. (QCOM) – Rating change “BUY” to “HOLD”
April 16
AbbVie (ABBV) – Rating change “HOLD” to “BUY”
High Yield Tier
AGNC Investment Corporation (AGNC – yield 17.1%) – The mortgage REIT hit a 52-week low last week after rallying near the high back in February. AGNC has since bounced back somewhat along with the rest of the market. The ten-year has moved higher again and the Fed is likely to cut the fed funds rate several times this year, perhaps beginning in June. Those will help increase the spreads and profits for the mortgage REIT. AGNC can’t stand up to a market like we’ve had recently with indiscriminate selling. But it should come back when the market stabilizes. The mortgage REIT also reports earnings next week. HOLD
Brookfield Infrastructure Partners (BIP – yield 5.9%) – BIP should have been set up for strong relative performance in the recent market volatility. The problem is that interest rates spiked higher at the same time, which is bad for an MLP because it increases borrowing costs and narrows profits. BIP is having a crummy year after two before this. But the business is sound. And yet, the stock isn’t delivering. It’s off the lows, but it’s still miles below the early 2022 high. The stock has not been behaving as expected. (This security generates a K1 form at tax time.) HOLD
Cheniere Energy Partners, L.P. (CQP – yield 5.5%) – I didn’t think this LNG exporter partnership would be so resilient. Sure, it’s off the high. But not by all that much. CQP is also still up about 10% YTD and 25% since the election, even after the recent terrible market. Global natural gas demand remains strong and growing, and Cheniere is the largest U.S. exporter. Regulations are coming down, and gas production is being ramped up. It should be in a strong position for the rest of the year after surviving this market in fine shape. (This security generates a K1 form at tax time.) HOLD
Enterprise Product Partners (EPD – yield 7.0%) – Even this stable midstream energy partnership took a hit in the recent market. Nothing is safe when there is indiscriminate selling. But it is rebounding this week and seems to be quickly regaining its footing. I expect EPD to move back toward the high and probably beyond when the market stabilizes. Enterprise reports earnings later this month and could well get a boost after that. In the meantime, it pays you well to wait. (This security generates a K1 form at tax time.) BUY
FS KKR Capital Corp. (FSK – yield 14.8%) – This Business Development Company (BDC) is cyclical, having a portfolio of small companies, and it suffers when there is angst regarding the economy. It plunged along with everything else earlier this month. But it has been rebounding over the last week. If a recession is avoided or the economic narrative doesn’t get ugly, FSK should be okay. It really pays you to wait things out with a better than 14% yield. It will continue to be held for now. Future performance will depend on the economy. HOLD
Main Street Capital Corporation (MAIN – yield 7.9%) – As a BDC, this story is very similar to that of FSK, although the stock hasn’t been quite as resilient. MAIN pulled back sharply in late February and early March but was moving back up. But like just about everything else, it got pummeled early this month and has rebounded over the past week. Main’s portfolio of companies not only makes high-interest loans, but it also takes equity stakes. The equity stakes are the primary reason the total returns have been better than just about every other BDC. If the economy hangs on, the BDC should continue to deliver, but if a slowing economy becomes an increasing problem, we’ll have to reevaluate. HOLD
ONEOK Inc. (OKE – yield 4.9%) – OKE tends to be more volatile than the other midstream companies in the portfolio. For much of the past few years, that has been a good thing. But lately it’s been a very bad thing. The stock price declined over 20% in April before recovering over the last week. I’m very bullish on midstream energy companies over the longer term, especially the ones that specialize in natural gas. But OKE has shown no resilience in an ugly market that could get worse before it gets better. It was downgraded to HOLD until things turn around. HOLD
The Williams Companies, Inc. (WMB – yield 3.5%) – This midstream energy company stock seems to keep on rolling no matter what. It held up better than any of its peers in the down market and is the portfolio stock not in the health care sector that is still near the 52-week high. It’s also up 12% YTD. WMB will likely continue to march back toward the high and beyond unless the market rolls over again. But regardless, it should be a solid holding over the rest of the year. BUY
Dividend Growth Tier
AbbVie (ABBV – yield 3.1%) – There had been reason to be cautious with ABBV. Very often, the stock pulls back after a surge to new highs. And it did in fact start coming down from its peak. But this market took ABBV, along with just about everything else, way down. The recent plunge gets the stock’s habit of pulling back after a surge out of its system. ABBV is at a great price right now. Sure, it could take a hit if the market panics again. But it should move higher after the market stabilizes. Things have improved as the company has moved beyond the Humira patent loss and already replaced the revenues. I like the prospects for the stock for the rest of this year. BUY
Ally Financial Inc. (ALLY – yield 3.7%) – This online banker has been bouncing around since late last summer. It had been near the high point of the recent range, but the market took it down this month. If the economy deteriorates toward a recession or close to it, the stock will have more trouble. It deals primarily with auto loans, which are highly cyclical. However, a recession is still unlikely at this point. ALLY was downgraded until this market stabilizes and there is more clarity regarding the economy over the rest of this year. HOLD
Broadcom Inc. (AVGO – yield 1.3%) – AVGO had a huge rebound last week. The stock closed Friday over 30% higher than its low point last week. AVGO was on fire last year and early this year. The stock took a huge hit in the ugly market. It has been more volatile to both the upside and downside. It should have a huge upside move when the market finally stabilizes. I can’t say that the selling in the market and the stock is over yet, but I’m highly confident that AVGO will be trading at a price a lot higher than it is now in a few months. That’s why it remained a buy when the market was still ugly and highly uncertain. BUY
Cheniere Energy, Inc. (LNG – yield 0.9%) Earnings – The LNG exporter stock is looking strong. Like everything else, it plunged earlier this month and then had a big surge last week. But it was doing better than most stocks before all this tariff volatility. LNG still has a positive YTD return and is up over 40% for the past year. The company and the stock should have a bright future as demand for natural gas overseas is likely to remain strong and growing. But it is an exporter at a time when trade war talk dominates the news. The rating was reduced until the market shows more evidence of stabilizing. HOLD
Constellation Energy Corporation (CEG – yield 0.8%) – This nuclear provider of electricity had been one of the hottest stocks on the market until late January. The electricity trade unwound after the DeepSeek news, and then all Hell broke loose with the tariffs. CEG soared and crashed. The market overdid it on the buy side and now it’s overdoing it on the sell side. Meanwhile, the company itself is doing great. Electricity demand is sure to grow. The two huge recent deals (the Microsoft (MSFT) deal and the Calpine acquisition) will deliver a high level of earnings growth in the years ahead, and there may be more new deals coming. The market will regain its footing at some point, and CEG can come back fast. HOLD
Digital Realty Trust, Inc. (DLR – yield 3.3%) – This data center REIT was hot stuff until technology stocks started selling off. DLR hit the 52-week high at the end of November and has been trending downward ever since. But the business itself is still booming. The weakness should end when the technology sector recovers. DLR probably got a little too high too fast. But the future still looks extremely bright. Data center growth will continue to be a strong trend as the recent troubles probably fade into memory. HOLD
Eli Lilly and Company (LLY – yield 0.8%) – Even this superstar drug company stock took a beating early this month. Since it was added to the portfolio in August of 2020, LLY had delivered 473% returns as of the end of March. LLY delivered an average annual return of 30% over the past 10 years and a 43% average annual return over the last three. It has a beta of just 0.50, meaning it is only half as volatile as the S&P 500. But it has been about flat over the past year. Meanwhile, the company is expected to generate 80% earnings growth in 2025. But there is another potentially huge catalyst in the works. It has a weight-loss drug in late-stage trials that is taken orally. Rarely is there a chance to buy this company cheap. The recent market has created a great entry point. BUY
McKesson Corporation (MCK – yield 0.4%) – What tariff trouble? What treacherous market? MCK has just continued trending higher all year. It’s even up for the month of April. It is also one of the very few portfolio stocks still trading near the high. The stock had been knocked down last summer and fall after the company reported supply chain issues with weight-loss drugs. But those problems are behind the company. MCK has resumed its old habit of slowly going higher and higher as it deals in a market that grows all by itself because of the aging population. It should continue to be a great holding in any market. BUY
Qualcomm Inc. (QCOM – yield 2.4%) – Technology has not been a good place to be. QCOM had been holding up okay because it wasn’t riding high before the market rolled over. But this month took no prisoners, and QCOM got whacked. It made a new 52-week low early this month and then had a huge recovery during the market’s epic rally. I like the prospects for the mobile device chipmaker for the rest of this year and beyond. But the next several days and weeks are anybody’s guess. It will be downgraded until the market shows more evidence that it has already hit bottom. HOLD
Toll Brothers, Inc. (TOL – yield 0.9%) – The luxury homebuilder stock actually fared alright in the recent market crash. That’s probably because the stock was beaten to a pulp before the tariff selloff. It also actually benefits from the benchmark 10-year Treasury rate moving lower. It fell below 4% for the first time since early October. That means mortgage rates will likely fall, which should improve affordability and home demand. However, rates started moving higher again, and the solid relative performance floundered. The longer-term supply/demand dynamic is hugely favorable to this company, and it will rebound eventually. HOLD
UnitedHealth Group Inc. (UNH – yield 1.4%) – The health insurer stock jumped on last week’s news that the government reimbursement rates for Medicare Advantage Plans will be larger than previously expected for 2026. UNH was knocked back last year because of a series of problems, one of which this news alleviates. But the bigger story is the stock’s performance in the rough market. UNH is actually up sharply in April and has been trending sharply higher since late February. It shows some strong defensive chops and is great to have in markets like this. HOLD
Waste Management, Inc. (WM – yield 1.4%) – The garbage king is delivering as advertised so far. It faced a huge defensive test shortly after being added to the portfolio and it passed. WM did fall sharply early this month but has since gained back nearly all of the losses already. WM is also one of the few portfolio stocks that is trading close to the high. You can depend on garbage. As the market plunges and uncertainty swirls, investors are attracted to safety, and the relative performance of stocks like WM tends to thrive. Of course, this stock also has a good track record in bull markets. It’s a good holding if the market turns around too. BUY
Safe Income Tier
NextEra Energy (NEE – yield 3.2%) – Even the safe stocks didn’t provide much refuge from the unforgiving market. NEE had been solid until the market really rolled over. When the market selling gets that bad, just about every stock gets punished. But NEE should have less downside than the overall market from here. And it should be a desirable stock when investors come back to buying and demand more safety. NEE has also performed well in strong markets. I think NEE will be higher in the months ahead and should provide a smoother rise than most stocks. BUY
USB Depository Shares (USB-PS – yield 6.2%) – The recent turbulence should have been a good time for fixed income. But interest rates spiked along with the stock market volatility. As a result, this preferred stock plunged to a new 52-week low. The combination of economic uncertainty and rising interest rates took the stock down. However, it should regain traction when the market stabilizes. The risk is spiking interest rates, which seems unlikely at this point. BUY
Vanguard Long-Term Corp. Bd. Index Fund (VCLT – yield 5.1%) – Ditto for VCLT. The long-term corporate bond ETF loves falling interest rates and hates rising ones. There will be more price pressure if rates continue to rise and vice versa. But the situation over the course of the year should be good. BUY
High Yield Tier | ||||||||||
| Security (Symbol) | Date Added | Price Added | Div Freq. | Indicated Annual Dividend | Yield On Cost | Price on Close 4/14/25 | Total Return | Current Yield | CDI Opinion | Pos. Size |
| AGNC Investment Corp. (AGNC) | 14.20% | 8 | -10% | 17.10% | HOLD | |||||
| Brookfield Infrastructure Ptnrs. (BIP) | 6.80% | 29 | 46% | 5.90% | HOLD | |||||
| Cheniere Energy Partners, L.P. (CQP) | 6.70% | 60 | 16% | 5.40% | HOLD | |||||
| Enterprise Product Partners (EPD) | 7.60% | 30 | 69% | 7.10% | BUY | |||||
| FS KKR Capital Corporation (FSK) | 14.40% | 19 | 12% | 14.80% | HOLD | |||||
| Main Street Capital Corp. (MAIN) | 9.00% | 53 | 26% | 7.90% | HOLD | |||||
| ONEOK Inc. (OKE) | 7.50% | 83 | 96% | 4.90% | HOLD | |||||
| The Williams Companies, Inc. (WMB) | 8/10/22 | 33 | Qtr. | 1.9 | 5.80% | 57 | 99% | 3.50% | BUY | 1 |
| Current High Yield Tier Totals: | 9.00% | 44% | 8.30% | |||||||
Dividend Growth Tier | ||||||||||
| AbbVie (ABBV) | 179 | 203% | 3.70% | BUY | ||||||
| Ally Financial Inc. (ALLY) | 32 | -16% | 3.70% | HOLD | ||||||
| Broadcom Inc. (AVGO) | 178 | 336% | 1.30% | BUY | ||||||
| Cheniere Energy, Inc. (LNG) | 7/10/24 | 175 | Qtr. | 2 | 1.10% | 222 | 28% | 0.90% | HOLD | 1 |
| Constellation Energy Corp. (CEG) | 8/14/24 | 186 | Qtr. | 1.41 | 1.00% | 207 | 11% | 0.80% | BUY | 1 |
| Digital Realty Trust, Inc. (DLR) | 146 | 32% | 3.30% | HOLD | ||||||
| Eli Lilly and Company (LLY) | 754 | 423% | 0.80% | BUY | ||||||
| McKesson Corporation (MCK) | 694 | 53% | 0.40% | BUY | ||||||
| Qualcomm (QCOM) | 139 | 86% | 2.40% | HOLD | ||||||
| Toll Brothers, Inc. (TOL) | 94 | -37% | 1.10% | HOLD | ||||||
| UnitedHealth Group Inc. (UNH) | 587 | 16% | 1.40% | HOLD | ||||||
| BUY | 1 | |||||||||
| Current Dividend Growth Tier Totals: | 2.90% | 95% | 1.80% | |||||||
Safe Income Tier | ||||||||||
| 68 | 79% | 3.40% | BUY | |||||||
| U.S. Bancorp Depository Shares (USB-PS) | 10/12/22 | 19 | Qtr. | 1.13 | 6.10% | 18 | 12% | 6.20% | BUY | 1 |
| 4.50% | 73 | 1% | 5.10% | BUY | ||||||
| 5.10% | 31% | 4.90% | ||||||||
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