Major stock indexes in the United States posted their biggest gains in months last week on signs of inflation moderating. Soft inflation data, undeniably, bolstered expectations among investors that there could be a shift in the Federal Reserve’s present hawkish stance, which is unfavorably impacting consumers’ spending habits and deterring economic growth.
For the week, the broader S&P 500 jumped almost 6%, while the tech-laden Nasdaq climbed around 8%. Similarly, the Dow notched a gain of more than 5% for the week and is apparently on track to register its best October on record. After all, the consumer price index, a primary inflation barometer, logged its smallest 12-month jump last month since January.
However, stocks at large snapped last week’s winning streak, with all the major bourses closing in the negative territory on Nov 14. This is because Fed governor Christopher J. Waller cautioned that the Fed’s fight to curb inflation has “ways to go.”
Waller believes that investors have overreacted to the inflation data. And rightly so, since prices of household staple items like food, shelter and energy continue to rise at a record pace, as mentioned by the U.S. Bureau of Labor Statistics last week.
A New York Fed’s monthly survey also added that inflation is projected to rise to 5.9% on worries that there can be an unforeseen jump in gasoline prices in the near term. Respondents expect gas prices to jump 4.8% next year. In fact, the survey’s three-year as well as five-year inflation outlook also accelerated.
Thus, the Fed could easily tighten its monetary policy further, leading to higher borrowing costs and further gyration in the stock market. Lest we forget, the stock market did rally in the months of July and August on hopes that the Fed may slow down its rate hikes.
However, Fed Chair Jerome Powell had clarified that the Fed isn’t going to back down on its commitment to fight inflation, which is anyhow way ahead of its target of 2%. This eventually led to higher bouts of market volatility.
Hence, with the broader stock market struggling for direction as investors continue to gauge the Fed’s policy path, it’s prudent to invest in stocks that offer risk-adjusted returns at this point in time. Stocks that are less volatile than the markets they trade in, or in other words, low beta stocks (ranges from 0 to 1) have been considered.
But low-beta stocks provide fewer returns. Therefore, stocks that offer positive earnings estimate revisions, predominantly in the past two-month period, have also been well thought-out. Rising earnings estimates indicate that the company is fundamentally sound, and is well-poised to outperform the market in the near future. To top it, these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Archer Daniels Midland (ADM - Free Report) is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products.
ADM currently has a beta of 0.85. The Zacks Consensus Estimate for its current-year earnings has risen 9.3% over the past 60 days. ADM’s expected earnings growth rate for the current year is 42.6%. It’s projected earnings growth rate for the next five-year period is 7.2%.
Carter Bankshares (CARE - Free Report) is a bank holding company and the parent company of Carter Bank & Trust.
CARE, at present, has a beta of 0.96. The Zacks Consensus Estimate for its current-year earnings has risen 8.2% over the past 60 days. CARE’s expected earnings growth rate for the current year is 84.1%. It’s projected earnings growth rate for the next year is 23.4%.
W.R. Berkley (WRB - Free Report) is one of the nation’s largest commercial lines property casualty insurance providers.
WRB currently has a beta of 0.64. The Zacks Consensus Estimate for its current-year earnings has risen 4.6% over the past 60 days. WRB’s expected earnings growth rate for the current year is 26.2%. It’s projected earnings growth rate for the next five-year period is 9%.
Lamb Weston (LW - Free Report) is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries, and provides a range of appetizers.
LW presently has a beta of 0.54. The Zacks Consensus Estimate for its current-year earnings has risen 8.6% over the past 60 days. LW’s expected earnings growth rate for the current year is 45.7%. It’s projected earnings growth rate for the next five-year period is 26.9%.
AeroVironment (AVAV - Free Report) designs, develops, produces and operates a portfolio of products and services for government agencies, businesses and consumers. AeroVironment supplies UAS, tactical missile systems and related services primarily to organizations within the United States Department of Defense.
AVAV, at present, has a beta of 0.54. The Zacks Consensus Estimate for its current-year earnings has risen 4.5% over the past 60 days. AVAV’s expected earnings growth rate for the current year is 30.4%. It’s projected earnings growth rate for the next year is 60.7%.
Shares of Archer Daniels Midland, Carter Bankshares, W.R. Berkley, Lamb Weston and AeroVironment have gained 39.5%, 18.6%, 24.9%, 26.4% and 44.4%, respectively, so far this year.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
Major stock indexes in the United States posted their biggest gains in months last week on signs of inflation moderating. Soft inflation data, undeniably, bolstered expectations among investors that there could be a shift in the Federal Reserve’s present hawkish stance, which is unfavorably impacting consumers’ spending habits and deterring economic growth.
For the week, the broader S&P 500 jumped almost 6%, while the tech-laden Nasdaq climbed around 8%. Similarly, the Dow notched a gain of more than 5% for the week and is apparently on track to register its best October on record. After all, the consumer price index, a primary inflation barometer, logged its smallest 12-month jump last month since January.
However, stocks at large snapped last week’s winning streak, with all the major bourses closing in the negative territory on Nov 14. This is because Fed governor Christopher J. Waller cautioned that the Fed’s fight to curb inflation has “ways to go.”
Waller believes that investors have overreacted to the inflation data. And rightly so, since prices of household staple items like food, shelter and energy continue to rise at a record pace, as mentioned by the U.S. Bureau of Labor Statistics last week.
A New York Fed’s monthly survey also added that inflation is projected to rise to 5.9% on worries that there can be an unforeseen jump in gasoline prices in the near term. Respondents expect gas prices to jump 4.8% next year. In fact, the survey’s three-year as well as five-year inflation outlook also accelerated.
Thus, the Fed could easily tighten its monetary policy further, leading to higher borrowing costs and further gyration in the stock market. Lest we forget, the stock market did rally in the months of July and August on hopes that the Fed may slow down its rate hikes.
However, Fed Chair Jerome Powell had clarified that the Fed isn’t going to back down on its commitment to fight inflation, which is anyhow way ahead of its target of 2%. This eventually led to higher bouts of market volatility.
Hence, with the broader stock market struggling for direction as investors continue to gauge the Fed’s policy path, it’s prudent to invest in stocks that offer risk-adjusted returns at this point in time. Stocks that are less volatile than the markets they trade in, or in other words, low beta stocks (ranges from 0 to 1) have been considered.
But low-beta stocks provide fewer returns. Therefore, stocks that offer positive earnings estimate revisions, predominantly in the past two-month period, have also been well thought-out. Rising earnings estimates indicate that the company is fundamentally sound, and is well-poised to outperform the market in the near future. To top it, these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Archer Daniels Midland (ADM - Free Report) is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products.
ADM currently has a beta of 0.85. The Zacks Consensus Estimate for its current-year earnings has risen 9.3% over the past 60 days. ADM’s expected earnings growth rate for the current year is 42.6%. It’s projected earnings growth rate for the next five-year period is 7.2%.
Carter Bankshares (CARE - Free Report) is a bank holding company and the parent company of Carter Bank & Trust.
CARE, at present, has a beta of 0.96. The Zacks Consensus Estimate for its current-year earnings has risen 8.2% over the past 60 days. CARE’s expected earnings growth rate for the current year is 84.1%. It’s projected earnings growth rate for the next year is 23.4%.
W.R. Berkley (WRB - Free Report) is one of the nation’s largest commercial lines property casualty insurance providers.
WRB currently has a beta of 0.64. The Zacks Consensus Estimate for its current-year earnings has risen 4.6% over the past 60 days. WRB’s expected earnings growth rate for the current year is 26.2%. It’s projected earnings growth rate for the next five-year period is 9%.
Lamb Weston (LW - Free Report) is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries, and provides a range of appetizers.
LW presently has a beta of 0.54. The Zacks Consensus Estimate for its current-year earnings has risen 8.6% over the past 60 days. LW’s expected earnings growth rate for the current year is 45.7%. It’s projected earnings growth rate for the next five-year period is 26.9%.
AeroVironment (AVAV - Free Report) designs, develops, produces and operates a portfolio of products and services for government agencies, businesses and consumers. AeroVironment supplies UAS, tactical missile systems and related services primarily to organizations within the United States Department of Defense.
AVAV, at present, has a beta of 0.54. The Zacks Consensus Estimate for its current-year earnings has risen 4.5% over the past 60 days. AVAV’s expected earnings growth rate for the current year is 30.4%. It’s projected earnings growth rate for the next year is 60.7%.
Shares of Archer Daniels Midland, Carter Bankshares, W.R. Berkley, Lamb Weston and AeroVironment have gained 39.5%, 18.6%, 24.9%, 26.4% and 44.4%, respectively, so far this year.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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