With just a few trading days left, 2023 is turning out to be a banner year for Wall Street after several twists and turns. The three major indices have been on a blistering rally to end the year and have hit new highs on several occasions, buoyed by the tech surge, cooling inflation and the optimism that the Fed is done with interest rate hikes.

The Nasdaq Composite emerged as the outperformer, gaining 43.2%. Meanwhile, the S&P 500 and Dow Jones Industrial have risen 23.8% and 12.8%, respectively. The strong trend is likely to continue in the New Year as well.

Investors should consider stocks such as VeriSign Inc. (VRSN Quick QuoteVRSN - Free Report) , Block (SQ Quick QuoteSQ - Free Report) , Royal Caribbean Cruises (RCL Quick QuoteRCL - Free Report) , W.R. Berkley Corp. (WRB Quick QuoteWRB - Free Report) , and Eldorado Gold (EGO Quick QuoteEGO - Free Report) that could be compelling picks to tap the trend.

Let’s discuss these events in detail below with the stocks:

Technology Emerges as a Hot Spot

Technology has turned out to be the most profitable sector in 2023, driven by the artificial intelligence (AI) boom, easing inflation and a surge in “Magnificent Seven” stocks. Additionally, bets that the Fed’s aggressive interest rate hiking campaign might be nearing an end powered the rally in the sector in recent months. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for initiatives when interest rates are low.

Investors should bet on the stocks that are yet to catch up with the broader sector rally. These stocks have a solid Zacks Rank #1 (Strong Buy) or 2 (Buy), a strong VGM Score of B or better, and a positive earnings growth rate for 2024. While there are many in the sector, VeriSign, with a Zacks Rank #2 and a VGM Score of B, seems an intriguing option. The stock has gained just 0.5% in 2023, suggesting room for upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

VeriSign provides Internet infrastructure services that include domain name registry services and infrastructure assurance services. It has an estimated earnings growth rate of 9.4% for the next year.

Bitcoin Upsurge

The world's largest cryptocurrency started 2023 just above $16,000 and climbed to a 12-month high of $45,000 in early December. The rally came on the back of broad enthusiasm about U.S. interest rate cuts and the imminent regulatory approval for Bitcoin ETFs. Bitcoin halving, scheduled for April 2024, added to the strength. Bitcoin's performance in 2023 has outpaced other assets like global stocks and gold. Bitcoin mining companies have outperformed Bitcoin by a wide margin amid the recent bullish price action in the largest cryptocurrency. This trend is likely to continue.

Block, formerly known as Square, offers financial and marketing services through its comprehensive commerce ecosystem that helps sellers start, run and grow their businesses. It saw a solid earnings estimate revision of 75 cents over the past 90 days for 2024 and has an estimated growth rate of 53.2%. Block has a Zacks Rank #2 and a Growth Score of A.

Easing Inflation

Inflation in the United States has been cooling, with the Consumer Price Index edging down for the second consecutive month in November. Inflation has now fallen significantly to 3.1% from a 40-year high of 9.1% in June 2022. Lower inflation often leads to decreased interest rates and heightened consumer spending, which, in turn, boost the demand for stocks. This heightened demand is further fueled by robust company revenues, ultimately culminating in an appreciation of share prices. Thus, growth stocks tend to perform better when inflation is low.

Although most companies will benefit from this trend, Royal Caribbean looks more appropriate. This cruise company owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. With a market cap of $32.8 billion, the stock has surged 22.7% over the past month. Royal Caribbean has an estimated growth rate of 38.1% for 2024. It has a Zacks ETF Rank #1 and a VGM Score of B.

Monetary Policy Shift

In the latest meeting, Federal Reserve Chair Jerome Powell hinted at a major policy shift as inflation is easing and the economy is holding up better. He signaled three rate cuts for the next year, compared with the previous forecast of two rate cuts in 2024. The federal funds rate is expected to be in the range of 4.4-4.9%, down from the current 5.25% to 5.50%. This indicates that the Fed will cut rates by a total of 0.75% next year, indicating that the historic rate-hiking campaign might be ending.

Lower interest rates generally lead to reduced borrowing costs, which can stimulate economic growth. This can positively impact sectors like real estate, consumer discretionary and financial services, which are typically sensitive to interest rate changes. In real estate, for instance, lower rates can boost housing market activity by making mortgages more affordable. For consumer discretionary sectors, reduced borrowing costs can lead to increased consumer spending. In the financial sector, while lower rates can compress net interest margins for banks, they can also encourage lending and potentially lead to increased consumer and business loan activity.

As a result, investors could bet on any of these sectors to magnify gains in 2024. In particular, the most beaten-down stocks of 2023 could outperform in 2024. One exciting option could be W.R. Berkley, which is one of the nation’s largest commercial lines property casualty insurance providers.

The stock is down about 3% this year but has the potential to move higher in 2024, given its Zacks Rank #2 and a VGM Score of B. Additionally, W.R. Berkley saw a positive earnings estimate revision of 3 cents over the past 30 days for 2024, with an estimated growth rate of 20.2%.

Gold Ready to Shine

The allure of gold has returned in recent months on a decline in bond yields and a weaker U.S. dollar. A potential shift in monetary policy coupled with geopolitical tension presents an intriguing scenario for investors looking into 2024. Lower interest rates are usually good for gold, as it weakens the U.S. dollar. A weak dollar makes bullion cheaper for overseas buyers, thereby driving gold prices higher.

Additionally, geopolitical tensions like the Israel-Hamas conflict will continue to raise safe-haven buying, making gold attractive. Gold is often used as a means of preserving wealth during times of financial and political uncertainty. It usually does well when other asset classes struggle.

Given the optimism, investors have a long list of options to tap into the metal’s rally. Eldorado Gold, having a Zacks Rank #2 and a VGM Score of A, seems attractive. It is a gold-producing and exploration company with assets in Greece, Türkiye and Canada. It has a market cap of $2.7 billion. Eldorado Gold has an estimated earnings growth rate of 24% for 2024 and saw a positive earnings estimate of 15 cents over the past three months.

(We are reissuing this article to correct a mistake. The original article, issued on December 26, 2023, should no longer be relied upon.)