How to Prepare Your Portfolio for Higher Interest Rates

Review your portfolio now for opportunities and risks you might face if rates go up.

Jan 20, 2021 at 8:31AM While the yield on the 10-year Treasury is still near historic lows, rates have more than doubled since last spring's economic shutdown, and there are several factors that could lead to further increases. And though it seems unlikely that interest rates will skyrocket, even a moderate move higher will lead to stock market winners and losers-so you better start preparing now.

How much is the market worth? In order to understand why higher interest rates impact the stock market, you need to remember what an investment is and how it is valued. When investing, you are paying cash today for the expectation of a cash inflow in the future. You then "discount" those future inflows into today's dollars. The higher the discount rate you use, the less valuable the investment, and vice versa. Determining a discount rate for valuing the stock market is not an exact science, but most market participants use a combination of two inputs: the risk free rate and the equity risk premium (ERP.) The risk free rate reflects the safest investment you can make, and is generally proxied by the yield on the 10-year Treasury bond. The equity risk premium is an estimate of the additional compensation investors should demand for holding "risky" stocks, rather than ultra safe Treasuries. If either the risk free rate or the ERP increase, the discount rate goes up. That means that if the yield on the 10-year Treasury increases, the value of your future cash flow falls, which all else being equal makes the stock market less valuable. A recent study by Fidelity estimated that if the discount rate increases by 1%, fair value for the S&P 500 falls by 800 points. That would represent about a 20% decline, sending stocks into a bear market. So as you can see, interest rates matter quite a bit for stock investors. But will rates go higher? Rates may stay low for numerous reasons, including continued high unemployment levels, a weak global economy, a renewed surge in COVID cases, and central banks focused on holding down borrowing costs and providing liquidity to financial markets. So given all that, what might cause rates to move up? Well, for starters, the economy could rebound faster than expected. The CARES Act passed in March 2020 is widely credited with providing support for the economy, even though the National Bureau of Economic Research estimates that only 40% of stimulus checks were actually spent. With the Democrats soon to be in control of the White House, as well as Congress, the odds of additional fiscal stimulus have increased, which could spur stronger economic growth. Unusually for a recession, savings rates have also increased, leaving some Americans with dry powder once the pandemic eases. In fact, some estimates indicate that Americans have saved more than $1 trillion during the pandemic. It also seems likely that there is significant pent-up demand for "normal" activities that have been unavailable because of COVID, including things like travel, movies, dining out, and entertainment. This potential spending surge could prompt stronger economic growth as well as potential inflation for some goods and services. Stronger growth and higher inflation could in turn lead to higher interest rates because a bond's fixed payments become less valuable when inflation is eating away at them. Finally, although the Federal Reserve is currently committed to keeping interest rates low in order to support an economy that has been ravaged by the pandemic, changes to its approach could eventually sow the seeds for higher rates. In an effort to spur stronger and more equitable economic growth, the Fed has already announced that they are shifting to measuring inflation across cycles, and that they would be willing to tolerate higher inflation for a time following a period of low inflation. Since inflation is a key component of interest rates, if the Fed is willing to let inflation run a little higher than market participants are accustomed too, higher interest rates could follow. How to profit from higher rates If interest rates do increase, investors will face both opportunities and risks, because while higher interest rates are a negative for the stock market as a whole, there are some companies and sectors that would benefit, while others are poised to suffer. Financial companies make money by taking in deposits and then lending money out at higher rates, and a very low interest rate environment hurts their profitability. In its Q3 earnings release, Charles Schwab (NYSE:SCHW) reported a 10% year-over-year decline in revenue, owing to "the overall decline in both short- and long-term rates." But that also means that if rates revert to higher levels, Schwab can report better financial performance even without making operational improvements. While financials might benefit from a higher-rate environment, companies with heavy debt burdens could face difficulties, as their cost of capital could increase alongside interest rates, resulting in a decline in profitability or even potential solvency issues. For instance, in the gaming sector, Caesars Entertainment (NASDAQ:CZR) has more than $15 billion in long-term debt, while Wynn Resorts (NASDAQ:WYNN) has nearly $13 billion. Caesars and Wynn are just two examples; from there, you'll want to screen for companies with heavy debt burdens that could potentially take a hit from rising rates. That approach, combined with a focus on financial companies that would benefit, could leave you well positioned for an unexpected surge in interest rates. Motley Fool’s 5G Stock Pick For the first time ever, Apple will release an iPhone that is 5G ready and 5G will supercharge this new iPhone. That’s why Apple analysts are convinced that an unprecedented number of Apple fans will sprint to upgrade to this new iPhone. But before you run out and buy shares of Apple, there’s something you need to know, because there might be an even more lucrative way to play the coming iPhone boom. Legendary Canadian stock analyst Iain Butler and his team at Stock Advisor Canada have identified a tiny American company (52 times smaller than Apple’s) that seems perfectly positioned for the coming iPhone supercycle. That’s why so many investors are buzzing with excitement about the new report from Iain Butler’s team at Stock Advisor Canada. The name of this report is “iPhone Super-Cycle: An Investor’s Guide to the Coming Apple Tsunami.” This new report reveals the reasons why we think every forward-thinking investor should be paying close attention to this revolutionary new industry. Simply click here to learn more today.Brian Perry has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.The Motley Fool Canada Makes 5G Buy Alert 5G is one of the greatest arrivals in technology since the birth of the internet. And in 2021… we could see an onslaught of new wealth-building opportunities for Canadian investors that would potentially dwarf any that came before them.

• Bigger than the dot-com boom

• Bigger than the Bitcoin boom of 2017

• Bigger than pot stocks

There’s a perfect storm being created by some of the biggest tech titans in the world… with each one fighting tooth and nail to win the 5G arms race. But the smart money is doing something different… Fortunately, our team at Motley Fool Stock Advisor Canada has identified one under-the-radar California company that’s cleverly positioned itself to dominate the 5G industry with its unique business model and technology. Simply click here to get the full story now. Learn more Motley Fool Returns STOCK ADVISORS&P 500 599%119% Stock Advisor launched in February of 2002. Returns as of 02/07/2021. Join Stock Advisor Cumulative Growth of a $10,000 Investment in Stock AdvisorCalculated by Time-Weighted Return STOCKS Wynn Resorts, Limited NASDAQ:WYNN $116.99 up $8.30 (7.64%) Caesars Entertainment Corporation NASDAQ:CZR The Charles Schwab Corporation NYSE:SCHW $55.74 up $0.54 (0.98%)RELATED ARTICLES

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3 Top Dividend Stocks to Buy in September Looking for extra income? Then look no further than these top dividend stocks for September. Sean Williams(TMFUltraLong) Sep 2, 2015 at 8:40AM Author Bio SOURCE: PICTURES OF MONEY VIA FLICKR. The past month has been wild for investors, with the stock market demonstrating volatility not seen since the Great Recession. For some traders -- those with short-term time frames, or who are trading on margin -- the stock market correction has been an unwelcome sight. However, for the long-term investor a correction is often a welcome opportunity to pick up high-quality, dividend-paying stocks on the cheap. Of course, choosing a dividend stock isn't exactly like finding a needle in a haystack. Out of more than 7,100 publicly traded companies on U.S. exchanges, something in the neighborhood of 40% paid a dividend (either special or regular) at some point over the trailing 12-month period. This just makes picking a quality dividend stock that much tougher. With that in mind, today we'll take a brief look at three of the top dividend stocks you might consider buying in September. As always, understand that these suggestions should be construed as starting points for your own research and not the conclusion. WYNN PALACE RENDERING IN MACAU. SOURCE: WYNN RESORTS. Wynn Resorts (NASDAQ:WYNN) Casino and resort operators may not be the first place you look when the stock market is in a funk, but Wynn offers one major advantage over its foes: its target audience. Wynn Resorts has been plagued in recent quarters by sluggish growth in Macau, while its peer Las Vegas Sands has generally performed well. Las Vegas Sands' strategy in Macau has involved balancing its target audience between wealthy consumers and China's burgeoning middle class. Wynn, on the other hand, targets middle-class consumers, but is widely known for really focusing on more affluent consumers. Wynn and its peers still feel some of the negative effects of market downturns, but less than others might -- their core clientele, the wealthy, are less affected by swings in the stock market. Although Wynn's dividend will vary based on the current market conditions, its projected annual payout of $2 per share (good enough for a 2.6% dividend yield), its affinity for handing over special dividends to investors, and its expected growth rate of nearly 8% per year over the next five years make this a top dividend stock worthy of your consideration. SOURCE: UNION PACIFIC. Union Pacific (NYSE:UNP) Throw around the idea of an economic slowdown in China or the United States and you're bound to worry investors in large logistics companies. Railroad operator Union Pacific is one such company, having seen close to a third of its valuation disappear in six months. Market weakness is partly to blame, but a persistent weakness in commodity prices and slowing demand for coal have been big culprits as well. However, there's good news, too! Union Pacific has survived countless pullbacks before, and it'll likely motor ahead following this one. The interesting aspect of the railroad industry is that when you consider weight transported per mile, it's considerably more efficient than shipping by truck. Also, Union Pacific has generally done a good job keeping its costs under control, which has allowed it to grow its EPS in the high single digits most years. But here's the real hook: if you think about Union Pacific as a true long-term investor should, there's little reason not to own it. Demand for energy products and agriculture should naturally improve over time as the U.S. population grows, and these are core products that Union Pacific transports. It's simple math that works in investors' favor and should help improve Union Pacific's pricing power. Sporting a 2.5% yield and a reasonable forward P/E below 14, I suspect Union Pacific is a top dividend stock that has the tools needed to keep most income investors happy. SOURCE: WAL-MART. Wal-Mart (NYSE:WMT) It may be hard to believe, but retail giant Wal-Mart is actually at its lowest levels since 2012. On top of recent market weakness, Wal-Mart hasn't met Wall Street's sales growth and profit expectations in recent quarters, which has added cement weights to its stock price. But there could be good news right around the corner, as we've seen a lot of encouraging signs out of Wal-Mart. The company has seen encouraging growth from its Neighborhood Market stores, which are smaller locations focused on the small-town consumer who might otherwise avoid larger corporations. Additionally, Wal-Mart has seen strength in its grocery segment in Q2, possibly implying that its product initiatives and focus on the cost-conscious consumer are again paying off. It's also important to keep in mind that regardless of how the stock market is performing there will always be cost-conscious consumers, and those eager for shopping convenience, for whom Wal-Mart is still appealing. With the incredible pricing power and clout that Wal-Mart can throw around in the retail world, its dividend yield crossing 3% could be the dangling carrot that finally buoys its ailing stock. 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Market-beating Motley Fool investor Iain Butler just revealed his best stocks for Canadian investors to buy this month, and I don’t know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. But please note: As of right now, you could miss out simply because you may not be on the list to receive these 10 best stocks to buy now. Click here to discover how you can take advantage of this.Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.The Motley Fool Canada Makes 5G Buy Alert 5G is one of the greatest arrivals in technology since the birth of the internet. And in 2021… we could see an onslaught of new wealth-building opportunities for Canadian investors that would potentially dwarf any that came before them.

• Bigger than the dot-com boom

• Bigger than the Bitcoin boom of 2017

• Bigger than pot stocks

There’s a perfect storm being created by some of the biggest tech titans in the world… with each one fighting tooth and nail to win the 5G arms race. But the smart money is doing something different… Fortunately, our team at Motley Fool Stock Advisor Canada has identified one under-the-radar California company that’s cleverly positioned itself to dominate the 5G industry with its unique business model and technology. Simply click here to get the full story now. Learn more Motley Fool Returns STOCK ADVISORS&P 500 599%119% Stock Advisor launched in February of 2002. Returns as of 02/07/2021. Join Stock Advisor Cumulative Growth of a $10,000 Investment in Stock AdvisorCalculated by Time-Weighted Return STOCKS Wal-Mart Stores, Inc. NYSE:WMT $144.36 up $1.83 (1.28%) Wynn Resorts, Limited NASDAQ:WYNN $116.99 up $8.30 (7.64%) Union Pacific Corporation NYSE:UNP $204.20 down $0.25 (-0.12%)READ MORE

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3 Dividend Stocks to Buy in July The recent market slump makes it a good time to look for bargains. For dividend investors, here are three good places to start. Matthew Frankel, CFP, Selena Maranjian, And Eric Volkman(TMFMathGuy) Jul 8, 2015 at 7:15PM Author Bio With the markets down significantly from the all-time highs of just a few months ago, it's a great time to be on the lookout for bargains. For dividend investors, several stocks look like excellent buying opportunities amid the recent market weakness, and they range from the strong and stable to the speculative. Here are three dividend stocks our experts feel especially confident about this month. Selena Maranjian General Motors (NYSE:GM) has come a long way from its 2009 bankruptcy filing, and it appears to have more improvement ahead. A sweeping overhaul of GM's expensive and inefficient product-development process a few years back has allowed the company to save $1 billion per year and produce vehicles that rival Toyota Motor's offerings in quality(NYSE:TM). CEO Mary Barra has laid out some bold goals, such as hiking GM's adjusted pre-tax profit margin, which was recently 5.8%, to between 9% and 10% by "early next decade." The company is boosting profitability in part by shutting down or downsizing less lucrative operations in regions such as Russia, Indonesia, Thailand, and Australia. Meanwhile, it's investing more in areas including China, where GM and its Chinese partners plan to spend $14 billion between 2014 and 2018, opening five new factories and introducing 60 new or refreshed models. Although sales have recently been flat in China despite price cuts, GM's June sales surged 15% in Canada and 4% in the U.S. on a year-over-year basis. China represents a long-term growth opportunity, and strength in GM's traditional markets is helping to make up for lackluster short-term results elsewhere. General Motors is also spending $12 billion developing its Cadillac brand and hopes to nearly double Cadillac sales between 2014 and 2020. GM is investing heavily in R&D, too, focusing on advances in weight reduction and fuel economy. Other growth catalysts include a completely revamped Chevy Malibu family sedan, a booming SUV division, and a rebuilt financing arm, General Motors Finance Company. GM's dividend, which was raised by 20% earlier this year, recently yielded a hefty 4.2%. Income-seeking investors can collect significant dividends from GM each quarter while reasonably expecting solid stock-price appreciation, too. Eric Volkman Among the nation's big banks, Wells Fargo (NYSE:WFC) has one of the highest dividend yields at 2.6%. It can afford this substantial payout because its fundamentals are solid, particularly considering the current low-interest-rate environment. In Q1, core loans rose 7% year over year, while total average deposits advanced 9% to $1.2 trillion. The bottom line was down slightly, but revenue rose 3% to $21 billion. Net charge-offs declined to 0.3% of total loans from 0.4% in Q1 2014. More encouragingly, the company is making a new push in the area where it has been No. 1 over the past few years: mortgage lending. This past April it bought a portfolio of commercial loans totaling around $9 billion from the finance arm of General Electric. That has padded the company's considerable lead and deepened its involvement in promising segments such as manufactured-home communities. Meanwhile, the Federal Reserve is widely expected to raise its key interest rate in the near future. This will benefit Wells Fargo in numerous ways -- namely, by widening the spread between what it earns in loans and what it pays out in deposits and CDs. Wells is a winner, and it's sure to continue rewarding its stockholders for sharing in the victory. Matt Frankel My favorite dividend stock for July is Wynn Resorts (NASDAQ:WYNN). While it may sound counterintuitive to buy a dividend stock whose dividend was recently cut, I believe Wynn is still worth a look. For starters, the stock is cheap right now. Shares have lost nearly 50% of their value over the past year, mainly thanks to a slowdown in Macau, where Wynn derives the majority of its revenue. Gaming revenue from Macau is down 36.6% year over year, and the VIP segment of the market -- which is Wynn's bread and butter -- is performing even worse. As far as the dividend cut is concerned, I don't see it as a cause for alarm, but rather as Wynn's choice to use its capital wisely. Wynn is currently investing in its largest project to date: the Wynn Palace in Macau, which is to be a 1,700-room, $4.1 billion luxury casino resort. The Wynn Palace will be well positioned to capitalize on the Macau turnaround that's expected to take place in the coming years. In fact, UBS just upgraded its outlook for Macau from "cautious" to "constructive," mainly on the news that the Chinese government is easing visitation restrictions for mainland residents. CEO Steve Wynn made it clear to investors that he would rather keep a strong balance sheet than borrow money to pay a strong dividend, and I feel investors should applaud this move, especially while the company is putting so much of its capital into new projects. Wynn Resorts has an excellent record of generous distributions to shareholders, and in fact it has paid special dividends on top of its normal payouts in all but one year since 2006. With the company investing billions into ambitious new projects over the next several years, I believe patient shareholders could be handsomely rewarded once again. The 10 Best Stocks for Canadians to Buy This Month Market-beating Motley Fool investor Iain Butler just revealed his best stocks for Canadian investors to buy this month, and I don’t know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. But please note: As of right now, you could miss out simply because you may not be on the list to receive these 10 best stocks to buy now. Click here to discover how you can take advantage of this.Eric Volkman has no position in any stocks mentioned. Matthew Frankel has no position in any stocks mentioned. Selena Maranjian owns shares of General Electric Company. The Motley Fool recommends General Motors and Wells Fargo. The Motley Fool owns shares of General Electric Company and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.This TSX Stock Is Cashing In On What 1 CEO Says Is Worth 35 Amazons The answer is a radical breakthrough that Wired says is “the rocket fuel of the AI boom.” And they’re not alone in seeing it that way…

• A Shark Tank billionaire says it will create the world’s first trillionaire

• Baidu CEO Robin Li pivoted his entire company — which includes his $7 billion stake — to take advantage of it

• Even superinvestor Warren Buffett says that it will have a “hugely beneficial social effect”

And if you’re an investor, I haven’t even told you the best part… Because one remarkable Canadian company is absolutely dominating this exploding market. This TSX-listed company is only about 1% the size of Amazon, yet it’s already begun introducing this groundbreaking technology to the market. Click Here for the Full Story Motley Fool Returns STOCK ADVISORS&P 500 599%119% Stock Advisor launched in February of 2002. Returns as of 02/07/2021. Join Stock Advisor Cumulative Growth of a $10,000 Investment in Stock AdvisorCalculated by Time-Weighted Return STOCKS Wells Fargo & Company NYSE:WFC $32.56 down $0.10 (-0.31%) Wynn Resorts, Limited NASDAQ:WYNN $116.99 up $8.30 (7.64%) General Motors Company NYSE:GM $54.41 up $0.28 (0.52%) Toyota Motor Corporation NYSE:TM $150.86 up $2.84 (1.92%) General Electric Company NYSE:GE $11.40 down $0.05 (-0.44%)READ MORE

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3 Dividend Stocks Wall Street Is Wrong About Wall Street isn't always right -- here are three stocks our contributors believe are mis-priced. Matthew Frankel, CFP, Dan Caplinger, And Jordan Wathen(TMFMathGuy) Apr 1, 2015 at 7:10AM Author Bio There countless dividend-paying stocks to choose from on any given day -- some are expensive while others seem cheap. And while Wall Street is usually pretty good at valuing stocks, it isn't 100% accurate. Here are three stocks that our analysts believe are mispriced, and why they feel that way: Dan Caplinger: One of the hardest-hit dividend stocks in the market recently has been casino giant Wynn Resorts (NASDAQ:WYNN), which has had to deal with an unusual combination of business challenges lately. Like other casino stocks, Wynn has seen big problems in its Macau operations, with the decline in traffic in the Asian gaming capital weighing on overall sales and profits throughout the company. At the same time, Wynn is having to deal with a proxy fight involving Elaine Wynn, ex-wife of co-founder and CEO Steve Wynn, who had her seat on the board of directors eliminated and was not nominated to any of the other seats up for election at this year's shareholder meeting. Bearish investors are concerned that Macau's troubles could be just the beginning if China clamps down on the gambling mecca's growth. Yet past fears of greater regulatory scrutiny have never panned out in the past, and despite growing pains as it adapts to changed conditions in Macau, Wynn Resorts has a new property in the works there that could help reinvigorate the casino market. With a consistent track record of rising regular dividends and frequent special dividends, Wynn Resorts looks like a good long-term play even if Macau's struggles continue for a while. Matt Frankel: After a dismal earnings report brought on mainly by weak commodity prices and poor global growth, Caterpillar (NYSE:CAT) has fallen by about 13% so far in 2015, and is off a whopping 27% since last summer's highs. Due to weak economic growth, Caterpillar saw its construction industries sales fall 9%, and its mining division did even worse, losing 10%. And this makes perfect sense -- after all, with depressed commodity prices it's tough for mining companies to justify purchasing new equipment. Also, the drop in oil and gas prices hasn't fully appeared in Caterpillar's earnings yet. The company's 2015 outlook calls for earnings to drop by about 20% from what it reported in 2014. However, for long-term investors, these issues should be temporary. Most experts agree that oil prices will go back up -- they just disagree on the "when" and "how much." For commodities and oil prices, I certainly believe there is a lot more potential to the upside than to the downside at this point, so investors' downside risk is somewhat limited. For example, I think it's more likely for oil to gain $20 per barrel than to lose another $20 at this point. There's no question that the next few years could certainly be very turbulent for Caterpillar, but from a long-term perspective, the current entry point looks very attractive. And in the meantime, you'll be paid a handsome dividend yield of about 3.5%, which should be very safe since it represents just 60% of the new, lower 2015 earnings outlook. Jordan Wathen: Wall Street has a love affair with Home Depot (NYSE:HD). Since bottoming in 2009, the stock has returned more than 500%, dividends included. Analysts continue to walk up their price targets and earnings estimates, based on its recently strong performance. Investors and analysts alike have seemingly forgotten that Home Depot is a cyclical business. It will do well in good housing markets and perform terribly in downturns. The stock currently trades for 25 times last year's earnings and free cash flow, an expensive price for a mature retailer, in my view. A fair price might be closer to 20 times its 2014 earnings and free cash flow, or a valuation about 20% lower than it trades today. Home Depot is a great company, but at this price it doesn't appear to be a great investment. Motley Fool’s 5G Stock Pick For the first time ever, Apple will release an iPhone that is 5G ready and 5G will supercharge this new iPhone. That’s why Apple analysts are convinced that an unprecedented number of Apple fans will sprint to upgrade to this new iPhone. But before you run out and buy shares of Apple, there’s something you need to know, because there might be an even more lucrative way to play the coming iPhone boom. Legendary Canadian stock analyst Iain Butler and his team at Stock Advisor Canada have identified a tiny American company (52 times smaller than Apple’s) that seems perfectly positioned for the coming iPhone supercycle. That’s why so many investors are buzzing with excitement about the new report from Iain Butler’s team at Stock Advisor Canada. The name of this report is “iPhone Super-Cycle: An Investor’s Guide to the Coming Apple Tsunami.” This new report reveals the reasons why we think every forward-thinking investor should be paying close attention to this revolutionary new industry. Simply click here to learn more today.Dan Caplinger owns shares of Wynn Resorts, Limited. Jordan Wathen has no position in any stocks mentioned. Matthew Frankel owns shares of Caterpillar,. The Motley Fool recommends Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.One 5G Stock for 2021 – Motley Fool Makes 5G Buy Alert 5G is one of the greatest arrivals in technology since the birth of the internet. And in 2021… we could see an onslaught of new wealth-building opportunities for Canadian investors that would potentially dwarf any that came before them.

• Bigger than the dot-com boom

• Bigger than the Bitcoin boom of 2017

• Bigger than pot stocks

There’s a perfect storm being created by some of the biggest tech titans in the world… with each one fighting tooth and nail to win the 5G arms race. But the smart money is doing something different… Fortunately, our team at Motley Fool Stock Advisor Canada has identified one under-the-radar California company that’s cleverly positioned itself to dominate the 5G industry with its unique business model and technology. Simply click here to get the full story now. Learn more Motley Fool Returns STOCK ADVISORS&P 500 599%119% Stock Advisor launched in February of 2002. Returns as of 02/07/2021. Join Stock Advisor Cumulative Growth of a $10,000 Investment in Stock AdvisorCalculated by Time-Weighted Return STOCKS Caterpillar Inc. NYSE:CAT $193.00 up $1.35 (0.70%) Wynn Resorts, Limited NASDAQ:WYNN $116.99 up $8.30 (7.64%) The Home Depot, Inc. NYSE:HD $278.86 up $0.04 (0.01%)READ MORE

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Markets March Lower as Caterpillar, Wynn Resorts Lead the Downtrend After record highs, March is starting out on the wrong foot for investors. Dan Caplinger(TMFGalagan) Mar 4, 2015 at 12:00PM Author Bio CATERPILLAR IS DOWN TODAY AS INVESTORS GROW MORE WORRIED ABOUT THE BULL MARKET. SOURCE: CATERPILLAR. It took just a couple days for the mood on Wall Street to change dramatically, with excitement about new record highs for several market benchmarks giving way to fears about the sustainability of the U.S. economic recovery in the face of challenging conditions abroad. As of 11:55 a.m. EST, the Dow Jones Industrials (DJINDICES:^DJI) were down 108 points, adding to yesterday's 85-point drop. Contributing to the gloomy mood were slightly weaker new private-sector job figures than investors had expected, along with further crude-oil price drops as inventory levels climbed. Caterpillar (NYSE:CAT) led the Dow's downward trend, while Wynn Resorts (NASDAQ:WYNN) was among the weakest performers in the Nasdaq 100 index. Caterpillar's 2% loss likely came from its exposure to the commodities markets. The heavy-equipment maker has increasingly relied on customers in the energy and mining industries to drive growth, yet the huge drop in oil prices has led many oil and gas exploration and production companies to rein in capital spending until the market stabilizes. With many potential customers expected to cut oil and gas production, their need for more equipment could stay low for the foreseeable future, and that could weigh further on Caterpillar's prospects. Even as the U.S. construction industry looks more promising, difficult conditions abroad suggest Caterpillar might have to wait a long time before it once again enjoys the international growth that helped send the stock to all-time highs in 2011. WYNN'S PLANNED COTAI RESORT. SOURCE: WYNN RESORTS. Meanwhile, Wynn Resorts' stock dropped 2.5% as investors increasingly worry about a combination of macroeconomic and company-specific issues. On one hand, revenue in the casino company's key market of Macau plunged by almost half in February, with even the Chinese New Year holiday failing to bolster figures. Given Wynn's exposure to Macau, investors worry that the gaming market in the Chinese special administrative region could be in for even tougher times. Wynn and some of its competitors still have expansion projects under way in the Asian gaming capital that could exacerbate problems in coming years if Macau doesn't rebound. Meanwhile, CEO Steve Wynn faces a battle over whether his ex-wife should retain her seat on the company's board of directors. Wynn Resorts does not intend to renominate Elaine Wynn to the board, but she reportedly plans to nominate herself. With Wynn's annual meeting scheduled for April 24, it could be weeks before the dispute is resolved. With the stock market posting strong gains in February, a slight pullback isn't yet cause for concern. But with investors already having waited for years for a significant correction in the 6-year-old bull market, you're likely to see nervousness continue over any potential reversal in the market's gains. The 10 Best Stocks for Canadians to Buy This Month Market-beating Motley Fool investor Iain Butler just revealed his best stocks for Canadian investors to buy this month, and I don’t know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. But please note: As of right now, you could miss out simply because you may not be on the list to receive these 10 best stocks to buy now. Click here to discover how you can take advantage of this.Dan Caplinger owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.What in the world could be worth “35 Amazons”? The answer is a radical breakthrough that Wired says is “the rocket fuel of the AI boom.” And they’re not alone in seeing it that way…

• A Shark Tank billionaire says it will create the world’s first trillionaire

• Baidu CEO Robin Li pivoted his entire company — which includes his $7 billion stake — to take advantage of it

• Even superinvestor Warren Buffett says that it will have a “hugely beneficial social effect”

And if you’re an investor, I haven’t even told you the best part… Because one remarkable Canadian company is absolutely dominating this exploding market. This TSX-listed company is only about 1% the size of Amazon, yet it’s already begun introducing this groundbreaking technology to the market.