Spirits Stocks Hold as Dow Enters Bear Territory

The blue-chip Dow Jones Industrial Average entered bear-market territory Monday, closing more than 20% below its recent high.  But spirits stocks held up well with five of the seven stocks we follow gaining in what was generally a dreary stock market.

Beer stocks broke even.  Anheuser-Busch InBev was trashed after Jeffries Financial Group downgraded the stock to a Hold.  Among Wall Streeters, a Hold equals a sell.   While Jeffries acknowledged that ""ABI is on a firmer footing and is successfully addressing each of the bear points in its equity story. Execution is improving and deleveraging on track. The company is delivering on numbers," but the financial services firm said ABI was overpriced.  

Wine stocks took the brunt of the selling Four of the stocks we follow declined, while one rose.

Why the Dow's descent into bear territory?  The declines were especially severe for stocks that are heavily leveraged, often as a result of recent acquisitions.   The Federal Reserve Board has been raising interest rates to curb inflation, and has stated it will continue to do so as long as necessary.

“My worry is there is a sense that the Fed’s going to raise rates until it breaks the economy, or something breaks,” said Paul Donovan, chief economist at UBS Global Wealth Management.  And Jeremy Schwartz, global chief investment officer at WisdomTree Asset Management, said, “We are worried the Fed’s current trajectory is more aggressive than necessary.”