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The U.S. stock market entered the final week of the year in jolly fashion on Tuesday, with all three major indices inching higher into the afternoon. The shortened trading week comes with the Dow sitting at all-time highs, while the S&P 500 has surged to within 1% of its former peak. The Nasdaq still has a way to go but has led the charge this year with a staggering 44% rally.
Stocks appear to be resuming their historic rally after recording their 8th consecutive weekly win, the longest streak since 2017. A bullish set of tailwinds are in play that could fuel further gains in 2024. Treasury yields continue to come down from their peaks, while inflation measures have shown significant signs of deceleration. We're seeing strength in the more aggressive pockets of the market this year including technology and consumer discretionary, while breadth and participation have also improved recently as other sectors join the rally.
Furthermore, positive seasonality and historical probabilities remain on the side of the bulls. The six-month stretch spanning November-April is the most bullish timeframe from a seasonal perspective, while election years have historically rewarded investors.
Monitoring Economic Data
Shoppers continued to spend with the holiday season wrapping up, as U.S. retail sales rose 3.1% between November 1st and December 24th according to a Mastercard SpendingPulse report. E-commerce sales grew at a 6.3% clip, a slower pace relative to last year's 10.6% as more shoppers returned to storefronts. Sales in the apparel and restaurant categories climbed 2.4% and 7.8%, respectively.
This week is light with limited data, no scheduled Fed official appearances, and a relatively insignificant earnings slate. On the housing front, the S&P CoreLogic Case-Shiller home price index showed that home prices rose 4.8% nationally in October compared with the same period last year. The figure jumped from the 4% increase in September and marked the strongest annual gain that we've seen this year.
A lower-than-expected inflation reading last week helped clinch another round of market gains. The Fed's preferred inflation gauge (core PCE) showed that prices rose 3.2% year-over-year, down from October's 3.4% and lower than the 3.3% expectation. On a monthly basis, core PCE ticked up 0.1%, which was flat relative to October. Headline PCE rose 2.6% year-over-year, also below the 2.9% estimate.
Odds have skyrocketed that the central bank will deliver a rate cut of at least 25 basis points in March of next year, with current probabilities standing at roughly 88%. For now, it appears that the Fed has succeeded in bringing down inflation from a 40-year high in 2022 following one of the fastest rate-hike campaigns in history.
Stocks to Watch
Google-parent Alphabet is flashing an aggressive entry point after displaying several bullish chart patterns, including an inverse head-and-shoulders and a cup-with-handle. GOOGL shares appear to be breaking out to new 52-week highs, just in time for the New Year. A substantial beneficiary of the artificial intelligence theme, Alphabet is a Zacks Rank #2 (Buy) stock. GOOGL shares have soared more than 60% in 2023.
Semiconductor leader Nvidia continues to hold up well despite recent export restrictions on its new AI chips. Nvidia blew away earnings projections this year and its future earnings estimates continue to rise. NVDA is a Zacks Rank #2 (Buy) and has led the Magnificent 7 stocks this year with a nearly 240% return.
Outside of tech, other sectors like industrials have joined the party. Caterpillar shares have broken out to the upside and are hitting 52-week highs. The world's largest construction and mining equipment manufacturer, Caterpillar is a Zacks Rank #3 (Hold). CAT stock has climbed roughly 26% this year.
Markets are looking to wrap up a very strong 2023 on a bright note. Make sure you're taking advantage of all that Zacks has to offer as stocks extend recent gains.
Disclosure: NVDA is a current holding in the Zacks Headline Trader portfolio.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Alphabet, Nvidia and Caterpillar
For Immediate Release
Chicago, IL – December 27, 2023 – Today, Zacks Investment Ideas feature highlights Alphabet (GOOGL - Free Report) , Nvidia (NVDA - Free Report) and Caterpillar (CAT - Free Report) .
Markets Climb Post-Christmas: 5 Stocks to Watch
The U.S. stock market entered the final week of the year in jolly fashion on Tuesday, with all three major indices inching higher into the afternoon. The shortened trading week comes with the Dow sitting at all-time highs, while the S&P 500 has surged to within 1% of its former peak. The Nasdaq still has a way to go but has led the charge this year with a staggering 44% rally.
Stocks appear to be resuming their historic rally after recording their 8th consecutive weekly win, the longest streak since 2017. A bullish set of tailwinds are in play that could fuel further gains in 2024. Treasury yields continue to come down from their peaks, while inflation measures have shown significant signs of deceleration. We're seeing strength in the more aggressive pockets of the market this year including technology and consumer discretionary, while breadth and participation have also improved recently as other sectors join the rally.
Furthermore, positive seasonality and historical probabilities remain on the side of the bulls. The six-month stretch spanning November-April is the most bullish timeframe from a seasonal perspective, while election years have historically rewarded investors.
Monitoring Economic Data
Shoppers continued to spend with the holiday season wrapping up, as U.S. retail sales rose 3.1% between November 1st and December 24th according to a Mastercard SpendingPulse report. E-commerce sales grew at a 6.3% clip, a slower pace relative to last year's 10.6% as more shoppers returned to storefronts. Sales in the apparel and restaurant categories climbed 2.4% and 7.8%, respectively.
This week is light with limited data, no scheduled Fed official appearances, and a relatively insignificant earnings slate. On the housing front, the S&P CoreLogic Case-Shiller home price index showed that home prices rose 4.8% nationally in October compared with the same period last year. The figure jumped from the 4% increase in September and marked the strongest annual gain that we've seen this year.
A lower-than-expected inflation reading last week helped clinch another round of market gains. The Fed's preferred inflation gauge (core PCE) showed that prices rose 3.2% year-over-year, down from October's 3.4% and lower than the 3.3% expectation. On a monthly basis, core PCE ticked up 0.1%, which was flat relative to October. Headline PCE rose 2.6% year-over-year, also below the 2.9% estimate.
Odds have skyrocketed that the central bank will deliver a rate cut of at least 25 basis points in March of next year, with current probabilities standing at roughly 88%. For now, it appears that the Fed has succeeded in bringing down inflation from a 40-year high in 2022 following one of the fastest rate-hike campaigns in history.
Stocks to Watch
Google-parent Alphabet is flashing an aggressive entry point after displaying several bullish chart patterns, including an inverse head-and-shoulders and a cup-with-handle. GOOGL shares appear to be breaking out to new 52-week highs, just in time for the New Year. A substantial beneficiary of the artificial intelligence theme, Alphabet is a Zacks Rank #2 (Buy) stock. GOOGL shares have soared more than 60% in 2023.
Semiconductor leader Nvidia continues to hold up well despite recent export restrictions on its new AI chips. Nvidia blew away earnings projections this year and its future earnings estimates continue to rise. NVDA is a Zacks Rank #2 (Buy) and has led the Magnificent 7 stocks this year with a nearly 240% return.
Outside of tech, other sectors like industrials have joined the party. Caterpillar shares have broken out to the upside and are hitting 52-week highs. The world's largest construction and mining equipment manufacturer, Caterpillar is a Zacks Rank #3 (Hold). CAT stock has climbed roughly 26% this year.
Markets are looking to wrap up a very strong 2023 on a bright note. Make sure you're taking advantage of all that Zacks has to offer as stocks extend recent gains.
Disclosure: NVDA is a current holding in the Zacks Headline Trader portfolio.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.