These stocks are overbought after a strong May for Wall Street and could be due for a pullback
A few stocks, including a handful of semiconductor giants, could take a hit after riding the market's rebound in May. The market closed out a big winning month with the S & P 500 climbed more than 6%, its largest monthly advance since late 2023 and leaving the benchmark little changed on the year. The Nasdaq Composite surged 9.6% this month, while the 30-stock Dow rose nearly 4%. Much of the gain was powered by a softening in the trade war after the U.S. and China agreed to temporarily step back from the brink and a trade deal between the U.S. and UK sparked hopes more deals could be in the offing. Heading into June, sentiment remains uneasy as investors are buffetted by daily tariff-related headlines and await news of any progress in trade relations between the U.S. and China, the world's two largest economies. CNBC looked for the most overbought and oversold stocks on Wall Street by weighing their 14-day relative strength index, or RSI, a momentum indicator, using data from LSEG. An RSI above 70 suggests a stock could be overbought and could be due for a near-term decline, while an RSI below 30 suggests a stock could be oversold and see a short-term rebound. Johnson Controls was the most overbought name this week, with an RSI of 86.9. The company, which manufactures and installs commercial HVAC systems, soared 20.8% this month and is higher by more than 28% year to date. Johnson Controls in early May reported fiscal second-quarter earnings and revenue above analysts' estimates, according to FactSet. Deutsche Bank upgraded the stock to buy in a May 11 note to clients, citing "significant operational improvement opportunities" at Johnson Controls since a new chief executive officer took over in March. Semiconductor company Broadcom , which popped 26% in May, also turned up as overbought with an RSI of 79.3. The rally in Broadcom comes ahead of the company's second-quarter earnings expected on June 11. Analysts polled by LSEG have a consensus price target about 1% below where it's trading, suggesting its valuation is running too high. Broadcom — known for its custom Application-Specific Integrated Circuit chips — is among several technology names that have rebounded in the recent market comeback. Other stocks that look overbought include GE Aerospace and Intuit , both of which also made the overbought segment last week . Shares of GE Aerospace and Intuit jumped 22% and 20% in May, respectively. UnitedHealth continues its recent run of appearing deeply oversold with a current RSI of about 20. The stock tumbled another 26.6% this month after sliding 21.4% in April. Cooper Companies and Copart were also oversold, with RSI's of 24.5 and 20.9, respectively. Shares of Cooper Companies, a medical devices and contact lens maker, were down 16.4% this month, bringing this year's loss close to 26%. Shares retreated after Cooper lowered its full-year organic growth forecast, even as second-quarter revenue and profit beat expectations.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
an hour ago
- CNBC
CNBC Daily Open: Playing "chicken" in markets can be a risky affair
When threatened, birds puff up their feathers to appear larger than they actually are, and squawk to signal aggression. On Friday, U.S. President Donald Trump suggested he would no longer be "Mr. NICE GUY" to China after the country "totally violated" its trade agreement with America. The same day, Trump said he would raise tariffs on steel imports to 50% from 25%. The escalations follow a détente in May, during which Trump reached a trade deal with the U.K., agreed with Beijing to sharply reduce reciprocal import duties and delayed for more than a month a tariff of 50% on the European Union — two days after announcing it. Those glad tidings lifted stocks. For May, the S&P 500 rose 6.2% and the Nasdaq Composite jumped 9.6%, with both indexes enjoying their best month since November 2023. The Dow Jones Industrial Average gained 3.9% for the month. But the mood among investors might change quickly, depending on communication coming from the White House. The word "chicken" is used as a metaphor for cowardice. In reality, they can be dangerous — there have been reports of humans being killed by Colonel Sanders' favorite bird. Mixed U.S. markets for end of May U.S. markets traded mixed Friday. The S&P 500 was flat, the Dow Jones Industrial Average rose 0.13% and the Nasdaq Composite fell 0.32%. Futures tied to the three indexes ticked down Sunday evening stateside. The pan-European Stoxx 600 index added 0.14% Friday, breaking a two-day losing streak. Germany's DAX climbed 0.27% as the country's inflation eased to 2.1% in May from 2.2% the previous month — but was still higher than expected. Expected Trump-Xi talkTrump and Chinese President Xi Jinping could discuss trade negotiations "this week," U.S. National Economic Council director Kevin Hassett said on Sunday. The conversation might ease tensions, which rose after Trump on Friday said that China has "TOTALLY VIOLATED" its preliminary trade agreement with America, and Chinese U.S. embassy spokesperson Liu Pengyu responded by accusing the U.S. of engaging in "abuse of export control measures." Trump says he'll double steel tariffsTrump on Friday told steelworkers at U.S. Steel that he will raise import duties on steel to 50% from 25%. The new import duties will start June 4, the president posted on Truth Social. On Saturday, the European Union said it is "prepared to impose countermeasures, including in response to the latest U.S. tariff increase." Even so, "tariffs are not going away," U.S. Commerce Secretary Howard Lutnick said on "Fox News Sunday." Mild U.S. inflation in AprilThe U.S. personal consumption expenditures price index, the Federal Reserve's preferred inflation reading, was muted for April. Prices ticked up 0.1% for the month, in line with the Dow Jones forecast. On an annual basis, it rose 2.1%, 0.1 percentage points lower than expected. Excluding food and energy, the core reading on which Fed policymakers tend to focus came in at 0.1% and 2.5%, against respective estimates of 0.1% and 2.6%. Musk cuts himself from DOGEElon Musk bid farewell to his role at the U.S. Department of Government Efficiency Friday. At the press conference, Musk deflected a reporter's question about a New York Times article detailing his alleged drug use last year. Tesla shares lost 14% this year amid Musk's involvement in politics — but they gained 22% in May following Musk's April statement he would spend less time at DOGE. [PRO] May jobs report in focusThe U.S. nonfarm payrolls report for May, out Friday, will provide more information on how the economy is holding up amid Trump's multiple tariffs —and play a big role in determining whether the May rally in stocks still has legs. Economists expect the number of jobs added in May to dip from April. It misses the forecast, markets could take a downturn as the White House appears to ratchet up its tariff rhetoric. Investors are piling into big, short Treasury bets alongside Warren Buffett Investors always pay close attention to bonds, and what the latest movement in prices and yields is saying about the economy. Right now, the action is telling investors to stick to the shorter-end of the fixed-income market with their maturities. Long-term treasuries and long-term corporate bonds have posted negative performance since September, which is very rare, said Todd Sohn, senior ETF and technical strategist at Strategas Securities, on "ETF Edge." The only other time that's happened in modern times was during the Financial Crisis," he added. "It is hard to argue against short-term duration bonds right now." It would seem that Warren Buffett agrees, with Berkshire Hathaway doubling its ownership of T-bills and now owning 5% of all short-term Treasuries, according to a recent JPMorgan report.
Wall Street Journal
2 hours ago
- Wall Street Journal
How Much Should the World's Richest Man Get Paid?
Elon Musk was the lowest-paid chief executive of an S&P 500 company last year. Tesla TSLA -3.34%decrease; red down pointing triangle paid him $0. It has been that way for several years amid a legal battle over a monster stock award in 2018. A court has twice thrown out Musk's pay package—calling the process of creating it flawed despite two votes of support from shareholders.
Yahoo
2 hours ago
- Yahoo
S.Korea factory activity shrinks again, new orders suffer steepest slump in 5 years, PMI shows
SEOUL (Reuters) - South Korea's factory activity shrank for a fourth month in May as frail domestic demand and the impact of U.S. tariffs took a heavy toll on factory output while overall orders plunged at their steepest pace in five years, a business survey showed on Monday. The Purchasing Managers Index (PMI) for manufacturers in Asia's fourth-largest economy, released by S&P Global, edged up to 47.7 in May, from 47.5 in April. The index has stayed below 50-mark, which separates expansion from contraction, since February. "South Korea's manufacturing sector came into May on an unstable footing," said Usamah Bhatti, economist at S&P Global Market Intelligence. "Firms often mentioned that the contraction was attributed to a continuing stagnation in the domestic economy, as well the continued impact of higher U.S. tariffs on the home market as well as on key export markets." New orders suffered their steepest contraction since June 2020 while output fell at the quickest rate in just over two-and-a-half years. U.S. President Donald Trump's global trade war has added to already weak demand conditions in South Korea, which recently suffered its worst wildfires on record and has faced political turmoil. The trade-reliant economy unexpectedly contracted in the first quarter, raising pressure on policymakers to shore up demand. The Bank of Korea on Thursday cut rates for the fourth time in its current easing cycle and almost halved this year's economic outlook to 0.8%, just days ahead of a presidential election slated for June 3, citing downside risks from U.S. tariff policy as well as a sluggish construction sector. The PMI survey also showed a fall in backlogs of work for the second month, with the most pronounced depletion in nearly five years in the face of subdued new orders. On a brighter note, manufacturers turned optimistic, reversing the brief spell of negative sentiment in April, partly led by hopes of an easing in global trade tensions. However, the degree of confidence was modest and reflected persistent concerns over the impact of tariffs. Sign in to access your portfolio
