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Leading Wall Street Stories of the First 9 Months & Top Stocks
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Wall Street has shown a remarkable rally, with just a few trading days left to end the first nine months of 2024. The artificial intelligence (AI) craze and rate-cut optimism have been the major driving factors amid recession fears, geopolitical tensions and the sell-off in tech stocks that weighed on investors’ confidence.
The S&P 500, the Dow Jones Industrial and the Nasdaq Composite have risen 20%, 11.2% and 20.5%, respectively, so far this year.
The Highly Anticipated Fed Rate Cut
After holding the rates at a 23-year high for 14 consecutive months since July 2023, Federal Reserve Chair Jerome Powell kicked off the new rate cycle era by initiating a 50 basis points cut in interest rates. This marked the first rate cut since 2020 to address slowing economic growth and showed greater confidence that inflation is moving sustainably toward the 2% target level.
The central bank projects two more rate cuts of 50 bps in its final two meetings this year, due in November and December. It also indicates another 100-bps rate cut next year and a 50-bps cut in 2026, which means four rate cuts in 2025 and two in 2026. Low rates reduce the cost of borrowing, which is often needed to finance the expansion of companies, thereby driving 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, 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.
Following the rate cut, investors could bet on any of these sectors to magnify gains for the rest of the year.
One of the exciting options could be Abercrombie & Fitch Co. (ANF - Free Report) , which operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids. The stock has a lower P/E ratio of 13.86 compared to the industry average of 17.43 and has a Value Score of A.
Abercrombie & Fitch is also primed for growth, given its Growth Score of A and a Zacks Rank #1 (Strong Buy). It saw a positive earnings estimate revision of 69 cents over the past 30 days for the fiscal year (ending January 2025) and has an estimated earnings growth of 63.4%.You can see the complete list of today’s Zacks #1 Rank stocks here.
AI Boom Drives Utility
The AI boom will continue to fuel the rally in the broader equity market, with companies investing huge sums in the technology sector and beyond. The expansion of AI applications holds the promise of ushering in fresh growth opportunities. According to a new report by Grand View Research, the global artificial intelligence market is expected to witness a CAGR (2024-2030) of 36.6% to reach $811.75 billion by 2030.
AI is bolstering electricity demand, as data centers require tons of energy for computing and cooling power. A simple ChatGPT task uses 10 times the energy a normal Google search does. So, data centers with a capacity of 30 megawatts are boosting capacity to handle 300 megawatts of power. This has made the traditional utilities sector of the market most appealing. Though technology seems to have become expensive, utilities remains an untapped area.
Investors seeking to make the most of the next leg in the AI industrial revolution should consider utility stocks. OGE Energy Corp. (OGE - Free Report) , having a Zacks Rank #2 (Buy), is one of the best-performing stocks of the first nine months. The stock saw a positive earnings estimate revision of a penny for this year over the past month, with an estimated growth rate of 3.38%. OGE Energy has a Growth Score of B, indicating that it is poised for more growth.
Tech Continues to Be in the Spotlight
The technology sector is still the best trade of 2024 despite the steep sell-off in July and August. The rapid adoption of AI and lower rates will continue to drive the sector higher. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for further initiatives when interest rates are low.
Further, cutting-edge technologies, including cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology, will continue to drive the sector. Meanwhile, worldwide IT spending is expected to increase 8% year over year to $5.06 trillion this year, according to the latest forecast by Gartner. This will put worldwide IT spending on track to surpass $8 trillion well before the end of the decade. Higher spending across software, data center systems, IT services and semiconductors will provide another boost to the sector.
The best-performing tech stock of the first nine months is Inseego Corp. (INSG - Free Report) , which is a provider of software-as-a-service and solutions for the Internet of Things. The stock has soared 743.9% so far this year and will likely move higher given its Zacks Rank #2 and a Growth Score of A. Inseego has an estimated triple-digit earnings growth rate for this year.
Gold Touches Record Highs
Gold has been on a solid ascent, hitting a series of new highs driven by the Fed rate cut optimism, strong physical buying from central banks and the Middle East geopolitical tensions, which raised the appeal for gold as a store of wealth. Gold is often used as a means of preserving wealth during times of financial and political uncertainty and usually does well when other asset classes struggle.
When interest rates fall, gold becomes more appealing compared to fixed-income assets such as bonds, which would yield weaker returns in a low-interest-rate environment. The yellow metal is up 27% this year, outperforming the broader market index. The bullish trend is likely to continue for the rest of the year. Idaho Strategic Resources Inc. (IDR - Free Report) is a vertically integrated, operating junior mining company. This Zacks Rank #2 stock produces gold principally at the Golden Chest Mine. IDR has surged about 148% so far this year and saw a solid earnings estimate revision of 45 cents for this year over the past month. It has an estimated earnings growth rate of 700%.
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Leading Wall Street Stories of the First 9 Months & Top Stocks
Wall Street has shown a remarkable rally, with just a few trading days left to end the first nine months of 2024. The artificial intelligence (AI) craze and rate-cut optimism have been the major driving factors amid recession fears, geopolitical tensions and the sell-off in tech stocks that weighed on investors’ confidence.
The S&P 500, the Dow Jones Industrial and the Nasdaq Composite have risen 20%, 11.2% and 20.5%, respectively, so far this year.
The Highly Anticipated Fed Rate Cut
After holding the rates at a 23-year high for 14 consecutive months since July 2023, Federal Reserve Chair Jerome Powell kicked off the new rate cycle era by initiating a 50 basis points cut in interest rates. This marked the first rate cut since 2020 to address slowing economic growth and showed greater confidence that inflation is moving sustainably toward the 2% target level.
The central bank projects two more rate cuts of 50 bps in its final two meetings this year, due in November and December. It also indicates another 100-bps rate cut next year and a 50-bps cut in 2026, which means four rate cuts in 2025 and two in 2026. Low rates reduce the cost of borrowing, which is often needed to finance the expansion of companies, thereby driving 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, 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.
Following the rate cut, investors could bet on any of these sectors to magnify gains for the rest of the year.
One of the exciting options could be Abercrombie & Fitch Co. (ANF - Free Report) , which operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids. The stock has a lower P/E ratio of 13.86 compared to the industry average of 17.43 and has a Value Score of A.
Abercrombie & Fitch is also primed for growth, given its Growth Score of A and a Zacks Rank #1 (Strong Buy). It saw a positive earnings estimate revision of 69 cents over the past 30 days for the fiscal year (ending January 2025) and has an estimated earnings growth of 63.4%.You can see the complete list of today’s Zacks #1 Rank stocks here.
AI Boom Drives Utility
The AI boom will continue to fuel the rally in the broader equity market, with companies investing huge sums in the technology sector and beyond. The expansion of AI applications holds the promise of ushering in fresh growth opportunities. According to a new report by Grand View Research, the global artificial intelligence market is expected to witness a CAGR (2024-2030) of 36.6% to reach $811.75 billion by 2030.
AI is bolstering electricity demand, as data centers require tons of energy for computing and cooling power. A simple ChatGPT task uses 10 times the energy a normal Google search does. So, data centers with a capacity of 30 megawatts are boosting capacity to handle 300 megawatts of power. This has made the traditional utilities sector of the market most appealing. Though technology seems to have become expensive, utilities remains an untapped area.
Investors seeking to make the most of the next leg in the AI industrial revolution should consider utility stocks. OGE Energy Corp. (OGE - Free Report) , having a Zacks Rank #2 (Buy), is one of the best-performing stocks of the first nine months. The stock saw a positive earnings estimate revision of a penny for this year over the past month, with an estimated growth rate of 3.38%. OGE Energy has a Growth Score of B, indicating that it is poised for more growth.
Tech Continues to Be in the Spotlight
The technology sector is still the best trade of 2024 despite the steep sell-off in July and August. The rapid adoption of AI and lower rates will continue to drive the sector higher. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for further initiatives when interest rates are low.
Further, cutting-edge technologies, including cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology, will continue to drive the sector. Meanwhile, worldwide IT spending is expected to increase 8% year over year to $5.06 trillion this year, according to the latest forecast by Gartner. This will put worldwide IT spending on track to surpass $8 trillion well before the end of the decade. Higher spending across software, data center systems, IT services and semiconductors will provide another boost to the sector.
The best-performing tech stock of the first nine months is Inseego Corp. (INSG - Free Report) , which is a provider of software-as-a-service and solutions for the Internet of Things. The stock has soared 743.9% so far this year and will likely move higher given its Zacks Rank #2 and a Growth Score of A. Inseego has an estimated triple-digit earnings growth rate for this year.
Gold Touches Record Highs
Gold has been on a solid ascent, hitting a series of new highs driven by the Fed rate cut optimism, strong physical buying from central banks and the Middle East geopolitical tensions, which raised the appeal for gold as a store of wealth. Gold is often used as a means of preserving wealth during times of financial and political uncertainty and usually does well when other asset classes struggle.
When interest rates fall, gold becomes more appealing compared to fixed-income assets such as bonds, which would yield weaker returns in a low-interest-rate environment. The yellow metal is up 27% this year, outperforming the broader market index. The bullish trend is likely to continue for the rest of the year. Idaho Strategic Resources Inc. (IDR - Free Report) is a vertically integrated, operating junior mining company. This Zacks Rank #2 stock produces gold principally at the Golden Chest Mine. IDR has surged about 148% so far this year and saw a solid earnings estimate revision of 45 cents for this year over the past month. It has an estimated earnings growth rate of 700%.