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The U.S. stock market indices scaled a new record, with the Dow steering past the 21,000 mark and matching the fastest 1000-point march in history. President Donald Trump’s conciliatory tones while addressing a joint session of Congress sent the equity markets rallying higher. His comments were perceived as “presidential”, igniting hope in the investing space.
Stocks moved northward as investors viewed rising interest rates as a glass half full, while fourth-quarter earnings growth remained at its peak in two years. As the equity market continues to gain traction, it will be prudent to invest in some of the top gainers.
Dow Crosses 21,000
The Dow Jones Industrial average treaded past the 21,000 mark for the first time in history. The Dow went crossed the psychologically significant level and registered one of the fastest run to such a milestone.
The blue-chip gauge closed above 20,000 just a few weeks ago. From that mark, the chase beyond 21,000 took only 24 trading sessions, matching with the record set in 1999 for the shortest 1,000-point gain. The rally from the 19,000 mark to 20,000 took just 42 days. Such an achievement is compelling, especially, when you see that it took almost two years for the Dow to reach 19,000 after it had passed 18,000, as markets were mostly grappling with earnings recession. While the move from 20,000 to 21,000 marked a 5% rise, the jump from 19,000 to 20,000 was 5.3%. Needless to say, as the market moves north, each 1000-point advance becomes smaller on a percentage basis.
Let’s take a look at how quickly the Dow has reached some of its previous milestones, with 2017’s 1,000-point jumps in bold:
Trading session between 1000-point milestones
Dow’s 1000-point milestone
Date of first close above 1000-milestone
24
11,000
5/3/1999
24
21,000
3/1/2017
42
20,000
1/25/2017
59
14,000
7/19/2007
85
7,000
2/13/1997
Investors should thank Tim Cook in part for Dow’s record journey. Over the past 24 trading days, Apple Inc. (AAPL - Free Report) rose nearly 15% and has been the biggest contributor to the blue-chip indices’ 1000-point rally. Coming in second was Industrial behemoth Boeing Co. (BA - Free Report) , gaining 10% over the past three weeks.
S&P 500, Nasdaq in Record Territory
The S&P 500 fell short of 2,400 after breaching the milestone for the first time ever. The index, nevertheless, closed at a record high, with majority of its sectors trading in the green. Lest we forget, the benchmark index had already posted its biggest one-month rally in its 93 years of existence following the election day. The index rose nearly 5% from Nov 9 to Dec 9, breaking the previous 30-day record set after President Richard Nixon’s election.
The Nasdaq Composite index also closed at a historical level, with around 205 stocks reaching a 52-week high. The tech-laden index had already breezed past the physiologically important 5,000 mark and has now outperformed other benchmarks, rising 9.7% year to date.
Stocks Soar on Trump’s Speech
The stocks gained on the heels of Trump’s speech to the Congress. The tone of his speech was less confrontational and more optimistic, which appealed to even those who haven’t been in support of Trump. He gave only a few specifications, but, confirmed lower taxes and enhanced infrastructure.
Trump plans a multi-trillion-dollar tax cut that will boost the U.S. economy and lift corporate profits. Such a tax cut included trimming of the business tax rate to 15% from 35%, reducing individual tax rates and elimination of the estate tax (read more: 5 Explosive Growth Stocks to Tap Best Win Streak in 25 Years).
He also keeps talking about how he wants to reconstruct America’s roads, bridges and other infrastructure, which led his administration to unveil a proposal to spend $1 trillion over the next 10 years. He, in fact, in his campaigns released a proposal to offer $137 billion in tax breaks to investors who want to finance toll roads, bridges or other projects (read more: Top Stock Picks for Trumps Trillion Dollar Infrastructure Plan).
Rate Hike Hopes Rise
Expectations of a rate hike as early as March have increased considerably, which also bolstered investors’ sentiment. The financial sector, in particular, touched its highest level since Dec 2007, before the worst of the financial crisis was ever known. Higher rates are a tailwind for financial stocks. Higher interest rates can boost net interest margins, which can lead to higher earnings.
According to the CME Group’s FedWatch, the probability for a March rate hike increased to 66% on Mar 1, up from 35% on Feb 28. While New York Fed President William Dudley said that the case for a rate hike had become “a lot more compelling” since November’s presidential election, San Francisco Fed President John Williams said that, “in my view, a rate increase is very much on the table for serious consideration” at the March 14-15 meeting.
Fed Chair Janet Yellen expects a gradual rate increase amid a modestly expanding economy and inflation that should touch the Fed’s desired target rate of 2% in the near term. She noted that waiting too long to hike rates would be imprudent as it might hamper the broader financial markets and dampen economic growth (read more: Yellen Increases Odds of March Rate Hike: 5 Top Winners).
Top 5 Winners
Investors scooped up shares on renewed optimism from President Trump and Fed officials. Also, the Q4 earnings results show another solid quarter for U.S. corporates. Total earnings for the companies that have reported so far are up 7.4% on 4.9% higher revenues, with 68.4% beating EPS estimates and 54.1% coming ahead of top-line expectations (read more: Record Quarterly Earnings in Q4).
Banking on such positive trends, we have selected five solid stocks from all the three major indices including the Dow, the S&P 500 and the Nasdaq. These stocks have not only gained immensely but are also poised to move north in the near term. At the same time, these stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
The Goldman Sachs Group, Inc. (GS - Free Report) operates as an investment banking, securities, and investment management company. Goldman Sachs has a Zacks Rank #2 and has gained 1.9% on Mar 1.
The company’s estimated earnings growth rate for the current year is 18.3%, more than the industry’s return of 9.1%. Goldman Sachs has outperformed the Financial-Investment Bank industry over the last one year (+63.9% vs. +53.5%).
Alaska Air Group, Inc. (ALK - Free Report) provides passengers and cargo air transportation services. The company has a Zacks Rank #2 and has gained 2.5% on Mar 1.
The company’s estimated earnings growth rate for the current year is 9.7%, in contrast to the industry’s decline of 7.1%. Alaska Air Group outperformed the Transportation-Airline industry over the last one year (+29.7% vs. +17.9%).
Seagate Technology PLC (STX - Free Report) is a provider of electronic data storage technology and solutions. The company has a Zacks Rank #1 and has rallied 2.7% on Mar 1.
PulteGroup, Inc. (PHM - Free Report) engages primarily in the homebuilding business. The company is involved in the acquisition and development of land primarily for residential purposes. PulteGroup has a Zacks Rank #1 and has gained 2% on Mar 1.
The company’s estimated earnings growth rate for the current year is 32.1%, more than the industry’s return of 13.3%. PulteGroup has outperformed the Building Products - Home Builders industry over the last one year (+25.9% vs. +17.1%).
ON Semiconductor Corp (ON - Free Report) offers a portfolio of analog, digital and mixed signal integrated circuits (ICs), standard products, image sensors and custom devices for customers. ON Semiconductor has a Zacks Rank #1 and has gained 1.3% on Mar 1.
The company’s estimated earnings growth rate for the current year is 57.3%, more than the industry’s return of 27.2%. ON Semiconductor has outperformed the Semiconductor - Analog and Mixed industry over the last one year (+73.8% vs. +43.5%).
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>
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Wall Street Hits Record High: Top 5 Gainers
The U.S. stock market indices scaled a new record, with the Dow steering past the 21,000 mark and matching the fastest 1000-point march in history. President Donald Trump’s conciliatory tones while addressing a joint session of Congress sent the equity markets rallying higher. His comments were perceived as “presidential”, igniting hope in the investing space.
Stocks moved northward as investors viewed rising interest rates as a glass half full, while fourth-quarter earnings growth remained at its peak in two years. As the equity market continues to gain traction, it will be prudent to invest in some of the top gainers.
Dow Crosses 21,000
The Dow Jones Industrial average treaded past the 21,000 mark for the first time in history. The Dow went crossed the psychologically significant level and registered one of the fastest run to such a milestone.
The blue-chip gauge closed above 20,000 just a few weeks ago. From that mark, the chase beyond 21,000 took only 24 trading sessions, matching with the record set in 1999 for the shortest 1,000-point gain. The rally from the 19,000 mark to 20,000 took just 42 days. Such an achievement is compelling, especially, when you see that it took almost two years for the Dow to reach 19,000 after it had passed 18,000, as markets were mostly grappling with earnings recession. While the move from 20,000 to 21,000 marked a 5% rise, the jump from 19,000 to 20,000 was 5.3%. Needless to say, as the market moves north, each 1000-point advance becomes smaller on a percentage basis.
Let’s take a look at how quickly the Dow has reached some of its previous milestones, with 2017’s 1,000-point jumps in bold:
Trading session between 1000-point milestones
Dow’s 1000-point milestone
Date of first close above 1000-milestone
24
11,000
5/3/1999
24
21,000
3/1/2017
42
20,000
1/25/2017
59
14,000
7/19/2007
85
7,000
2/13/1997
Investors should thank Tim Cook in part for Dow’s record journey. Over the past 24 trading days, Apple Inc. (AAPL - Free Report) rose nearly 15% and has been the biggest contributor to the blue-chip indices’ 1000-point rally. Coming in second was Industrial behemoth Boeing Co. (BA - Free Report) , gaining 10% over the past three weeks.
S&P 500, Nasdaq in Record Territory
The S&P 500 fell short of 2,400 after breaching the milestone for the first time ever. The index, nevertheless, closed at a record high, with majority of its sectors trading in the green. Lest we forget, the benchmark index had already posted its biggest one-month rally in its 93 years of existence following the election day. The index rose nearly 5% from Nov 9 to Dec 9, breaking the previous 30-day record set after President Richard Nixon’s election.
The Nasdaq Composite index also closed at a historical level, with around 205 stocks reaching a 52-week high. The tech-laden index had already breezed past the physiologically important 5,000 mark and has now outperformed other benchmarks, rising 9.7% year to date.
Stocks Soar on Trump’s Speech
The stocks gained on the heels of Trump’s speech to the Congress. The tone of his speech was less confrontational and more optimistic, which appealed to even those who haven’t been in support of Trump. He gave only a few specifications, but, confirmed lower taxes and enhanced infrastructure.
Trump plans a multi-trillion-dollar tax cut that will boost the U.S. economy and lift corporate profits. Such a tax cut included trimming of the business tax rate to 15% from 35%, reducing individual tax rates and elimination of the estate tax (read more: 5 Explosive Growth Stocks to Tap Best Win Streak in 25 Years).
He also keeps talking about how he wants to reconstruct America’s roads, bridges and other infrastructure, which led his administration to unveil a proposal to spend $1 trillion over the next 10 years. He, in fact, in his campaigns released a proposal to offer $137 billion in tax breaks to investors who want to finance toll roads, bridges or other projects (read more: Top Stock Picks for Trumps Trillion Dollar Infrastructure Plan).
Rate Hike Hopes Rise
Expectations of a rate hike as early as March have increased considerably, which also bolstered investors’ sentiment. The financial sector, in particular, touched its highest level since Dec 2007, before the worst of the financial crisis was ever known. Higher rates are a tailwind for financial stocks. Higher interest rates can boost net interest margins, which can lead to higher earnings.
According to the CME Group’s FedWatch, the probability for a March rate hike increased to 66% on Mar 1, up from 35% on Feb 28. While New York Fed President William Dudley said that the case for a rate hike had become “a lot more compelling” since November’s presidential election, San Francisco Fed President John Williams said that, “in my view, a rate increase is very much on the table for serious consideration” at the March 14-15 meeting.
Fed Chair Janet Yellen expects a gradual rate increase amid a modestly expanding economy and inflation that should touch the Fed’s desired target rate of 2% in the near term. She noted that waiting too long to hike rates would be imprudent as it might hamper the broader financial markets and dampen economic growth (read more: Yellen Increases Odds of March Rate Hike: 5 Top Winners).
Top 5 Winners
Investors scooped up shares on renewed optimism from President Trump and Fed officials. Also, the Q4 earnings results show another solid quarter for U.S. corporates. Total earnings for the companies that have reported so far are up 7.4% on 4.9% higher revenues, with 68.4% beating EPS estimates and 54.1% coming ahead of top-line expectations (read more: Record Quarterly Earnings in Q4).
Banking on such positive trends, we have selected five solid stocks from all the three major indices including the Dow, the S&P 500 and the Nasdaq. These stocks have not only gained immensely but are also poised to move north in the near term. At the same time, these stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
The Goldman Sachs Group, Inc. (GS - Free Report) operates as an investment banking, securities, and investment management company. Goldman Sachs has a Zacks Rank #2 and has gained 1.9% on Mar 1.
The company’s estimated earnings growth rate for the current year is 18.3%, more than the industry’s return of 9.1%. Goldman Sachs has outperformed the Financial-Investment Bank industry over the last one year (+63.9% vs. +53.5%).
Alaska Air Group, Inc. (ALK - Free Report) provides passengers and cargo air transportation services. The company has a Zacks Rank #2 and has gained 2.5% on Mar 1.
The company’s estimated earnings growth rate for the current year is 9.7%, in contrast to the industry’s decline of 7.1%. Alaska Air Group outperformed the Transportation-Airline industry over the last one year (+29.7% vs. +17.9%).
Seagate Technology PLC (STX - Free Report) is a provider of electronic data storage technology and solutions. The company has a Zacks Rank #1 and has rallied 2.7% on Mar 1.
The company’s estimated earnings growth rate for the current year is 98.4%, more than the industry’s addition of 20.5%. Seagate Technology has outperformed the Computer-Storage Devices industry over the last one year (+45.9% vs. +44.7%). You can see the complete list of today’s Zacks #1 Rank stocks here.
PulteGroup, Inc. (PHM - Free Report) engages primarily in the homebuilding business. The company is involved in the acquisition and development of land primarily for residential purposes. PulteGroup has a Zacks Rank #1 and has gained 2% on Mar 1.
The company’s estimated earnings growth rate for the current year is 32.1%, more than the industry’s return of 13.3%. PulteGroup has outperformed the Building Products - Home Builders industry over the last one year (+25.9% vs. +17.1%).
ON Semiconductor Corp (ON - Free Report) offers a portfolio of analog, digital and mixed signal integrated circuits (ICs), standard products, image sensors and custom devices for customers. ON Semiconductor has a Zacks Rank #1 and has gained 1.3% on Mar 1.
The company’s estimated earnings growth rate for the current year is 57.3%, more than the industry’s return of 27.2%. ON Semiconductor has outperformed the Semiconductor - Analog and Mixed industry over the last one year (+73.8% vs. +43.5%).
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>