Despite the major stock market indexes hitting new highs of late, the market is expected to remain volatile with the Fed raising its inflation forecast and signaling two interest hikes earlier than expected. In this scenario, we think it is wise to avoid the majorly overpriced stocks of T-Mobile (TMUS), Square (SQ), Snap (SNAP), and NIO (NIO). Read on.The major stock market indexes closed higher yesterday as U.S. consumer confidence jumped to a 16-month high. The Conference Board Consumer Confidence Index rose to 127.3 points this month, its highest level since February 2020.
However, the Federal Reserve expects inflation to climb to 3.4% this year, higher than its previous forecast of 2.4%. Also, the Fed now expects to make two interest rate hikes in late 2023 rather than no interest rate hike until 2024, as it previously forecasted. So, the market is expected to continue to witness some volatility. Against this backdrop, we believe several fundamentally weak stocks, which are significantly overpriced, could witness a price pullback in the near-term.
T-Mobile US, Inc. (NASDAQ:TMUS), Square, Inc. (SQ), Snap Inc . (NYSE:SNAP), and NIO Inc. (NIO) look extremely overvalued at their current price levels given their weak-financials and unfavorable growth prospects. So, we think it is wise to avoid these stocks now at all costs.