We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Fed Rate Cut Odds Rise: MU, NVDA, VST Stock Price to Gain
Read MoreHide Full Article
As employers added fewer jobs in June and the jobless rate ticked up, expectations that the Federal Reserve will trim the benchmark interest rate in the coming months rose significantly. Easing inflationary pressure is also paving the way for an interest rate cut soon.
This calls for investing in rate-sensitive tech stocks Micron Technology, Inc. (MU - Free Report) and NVIDIA Corporation (NVDA - Free Report) as well as utility player Vistra Corp. (VST - Free Report) for solid returns.
Slowdown in Hiring
Job additions in the United States were less in June than the prior month and the unemployment rate climbed to its highest level since October 2021, according the Bureau of Labor Statistics. The economy added 206,000 jobs last month, less than the downwardly revised job gains of 218,000 in May.
The U.S. economy may have added slightly more-than-estimated jobs in June, but the unemployment rate unpredictably jumped to 4.1% as the labor force participation rate increased. The broader unemployment rate, including discouraged workers and part-time jobs, held steady at elevated levels.
Cooling Inflation
Price pressures have loosened their grip on the economy recently, with the Fed’s preferred inflation gauge, the personal consumption expenditure index, remaining unaltered in May.
The decline in gasoline prices also eased consumer price pressures, with the consumer price index (CPI) remaining flat in May, a tell-tale sign that inflation is receding. Year over year, the CPI may have increased by 3.3% in May but that’s far below the pandemic-era peak of 9.1% in 2022. Meanwhile, producer prices dropped month over month in May.
Fed Rate Cut Expected Soon
The Fed, for quite some time, has kept interest rates at record highs to curb relentless price pressures. But now, with inflation beginning to show signs of subsiding, the Fed is widely expected to trim interest rates as early as in fall.
Additionally, with the pace of job additions cooling down, consumer outlays are likely to decrease, which may compel the Fed to remain dovish. The CME FedWatch Tool shows that 70.8% of market participants expect the Fed to cut interest rates by a quarter-point in the September policy meeting.
3 Likely Winners From a Rate Cut: MU, NVDA, VST
A low interest rate scenario bodes well for tech stocks, including Micron Technology and NVIDIA, as their cash inflows aren’t disrupted, and a reduction in the borrowing cost boosts their profit margins. At the same time, utility companies such as Vistra see their debt level decreasing in a low interest rate environment, which would help the company to pay off their dues.
Micron Technology
Provider of semiconductor memory solutions, Micron expects its revenues to improve on higher demand for its DRAM and NAND chips.
Micron currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has increased 31.8% over the past 60 days. The company’s expected earnings growth for the current year is 126.1%.
NVIDIA
Strong growth in demand for generative artificial intelligence is benefiting the inventor of the graphic processing unit, NVIDIA.
The Zacks Consensus Estimate for NVIDIA’s current-year earnings has increased 12.1% over the past 60 days. The company’s expected earnings growth for the current year is 106.2%. NVIDIA, at present, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vistra
Provider of electricity generation, distribution and transmission solutions, Vistra currently has a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has increased 9.4% over the past 60 days. The company’s expected earnings growth for the current year is 10%.
Shares of Micron Technology, NVIDIA and Vistra have gained 54.2%, 154.1%, and 132%, respectively, so far this year.
Image Source: Zacks Investment Research
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Fed Rate Cut Odds Rise: MU, NVDA, VST Stock Price to Gain
As employers added fewer jobs in June and the jobless rate ticked up, expectations that the Federal Reserve will trim the benchmark interest rate in the coming months rose significantly. Easing inflationary pressure is also paving the way for an interest rate cut soon.
This calls for investing in rate-sensitive tech stocks Micron Technology, Inc. (MU - Free Report) and NVIDIA Corporation (NVDA - Free Report) as well as utility player Vistra Corp. (VST - Free Report) for solid returns.
Slowdown in Hiring
Job additions in the United States were less in June than the prior month and the unemployment rate climbed to its highest level since October 2021, according the Bureau of Labor Statistics. The economy added 206,000 jobs last month, less than the downwardly revised job gains of 218,000 in May.
The U.S. economy may have added slightly more-than-estimated jobs in June, but the unemployment rate unpredictably jumped to 4.1% as the labor force participation rate increased. The broader unemployment rate, including discouraged workers and part-time jobs, held steady at elevated levels.
Cooling Inflation
Price pressures have loosened their grip on the economy recently, with the Fed’s preferred inflation gauge, the personal consumption expenditure index, remaining unaltered in May.
The decline in gasoline prices also eased consumer price pressures, with the consumer price index (CPI) remaining flat in May, a tell-tale sign that inflation is receding. Year over year, the CPI may have increased by 3.3% in May but that’s far below the pandemic-era peak of 9.1% in 2022. Meanwhile, producer prices dropped month over month in May.
Fed Rate Cut Expected Soon
The Fed, for quite some time, has kept interest rates at record highs to curb relentless price pressures. But now, with inflation beginning to show signs of subsiding, the Fed is widely expected to trim interest rates as early as in fall.
Additionally, with the pace of job additions cooling down, consumer outlays are likely to decrease, which may compel the Fed to remain dovish. The CME FedWatch Tool shows that 70.8% of market participants expect the Fed to cut interest rates by a quarter-point in the September policy meeting.
3 Likely Winners From a Rate Cut: MU, NVDA, VST
A low interest rate scenario bodes well for tech stocks, including Micron Technology and NVIDIA, as their cash inflows aren’t disrupted, and a reduction in the borrowing cost boosts their profit margins. At the same time, utility companies such as Vistra see their debt level decreasing in a low interest rate environment, which would help the company to pay off their dues.
Micron Technology
Provider of semiconductor memory solutions, Micron expects its revenues to improve on higher demand for its DRAM and NAND chips.
Micron currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has increased 31.8% over the past 60 days. The company’s expected earnings growth for the current year is 126.1%.
NVIDIA
Strong growth in demand for generative artificial intelligence is benefiting the inventor of the graphic processing unit, NVIDIA.
The Zacks Consensus Estimate for NVIDIA’s current-year earnings has increased 12.1% over the past 60 days. The company’s expected earnings growth for the current year is 106.2%. NVIDIA, at present, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vistra
Provider of electricity generation, distribution and transmission solutions, Vistra currently has a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has increased 9.4% over the past 60 days. The company’s expected earnings growth for the current year is 10%.
Shares of Micron Technology, NVIDIA and Vistra have gained 54.2%, 154.1%, and 132%, respectively, so far this year.
Image Source: Zacks Investment Research