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4 Top Finance Picks Amid Chances of Near Zero Rates Till '23
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The much-awaited Federal Reserve Open Market Committee (FOMC) meeting regarding the core monetary policy will be ending today afternoon. Per the CME Group FedWatch tool, there is a 100% chance that interest rates will be left unchanged this time as well.
The central bank’s decision will not be a surprise for the markets as in the June FOMC meeting, interest rates were left at 0.00-0.25%, with indications that it will be at the same level through 2022.
Further, in late August, the Fed announced a major change in its inflation policy, seeking to support the fall in unemployment level by targeting an inflation that averages 2% over time.
In order to balance for the periods of weaker performance by allowing inflation rates to go beyond 2%, the Fed might be looking to keep interest rates at near zero level for an even longer period, likely till 2023.
Can Upbeat Outlook Revision be Expected?
A slew of encouraging data indicating that the U.S. economy is gradually returning to the pre-pandemic level is instilling optimism among investors. Unemployment rate has been declining consistently on gradual resumption of economic activity and the Fed’s efforts to support the economy. However, the level is still quite high when compared with pre-pandemic levels.
YTD Unemployment Rate
Further, per the latest report by Institute for Supply Management, U.S. manufacturing activity increased for the fourth month in a row in August owing to solid new orders. Also, improving housing market and retail sales might make central bank give an upbeat outlook.
Where do Finance Stocks Stand?
The companies continued with their restructuring and streamlining initiatives, which are likely to help to attract more business and fuel revenue growth. Moreover, global expansion to diversify sources of revenues remains in the cards.
Also, a gradual revival of M&As is expected as valuations have dipped significantly for many companies affected by the coronavirus-related mayhem, making them attractive buyout choices. Thus, advisors are likely to be on a roll.
Further, low interest rates might have maintained the demand for bond issuances. Strong equity markets is expected to have resulted in rise in asset values, thereby, supporting asset managers. Also, continued volatility in the markets is likely to have kept trading desks busy, leading to rise in client activities and helping brokers earn higher related fees.
Notably, the main driving factor for the finance sector is overall health of the nation. Thus, positive economic data and the central bank’s purchase of trillions of dollars of bonds and lending programs to help businesses are expected support the sector.
Picking the Winning Finance Stocks
With the help of the Zacks Stock Screener, we have selected four stocks from the finance sector that investors can consider based on fundamental strength and solid prospects. These stocks have long-term earnings growth expectation of 5% or more and have a market cap of more than $1 billion. Also, the stocks have outperformed the S&P 500 so far this year.
Headquartered at Milwaukee, WI, Artisan Partners Asset Management Inc. (APAM - Free Report) has a Zacks Rank #2 and a market cap of $3 billion. The company’s long-term earnings are expected to grow at a rate of 11.3%. It has soared 18.1% so far this year.
Moody's Corporation (MCO - Free Report) , based in New York, carries a Zacks Rank #2 and has a market cap of $53.9 billion. The company’s long-term earnings are projected to increase at a rate of 10%. The stock has jumped 20.9% year to date.
With market cap of $21.1 billion, Nasdaq, Inc. (NDAQ - Free Report) has a Zacks Rank #2. This New York-based company’s long-term earnings are expected to be up at a rate of 8.6%. The company’s shares have rallied 19.7% so far this year.
Virtus Investment Partners’ (VRTS - Free Report) shares have gained 11.8% year to date. The company is headquartered at Hartford, CT, and has a market cap of $1.04 billion. The long-term earnings of this Zacks #1 Ranked stock are expected to rise at a rate of 5%.
YTD Price Performance
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
4 Top Finance Picks Amid Chances of Near Zero Rates Till '23
The much-awaited Federal Reserve Open Market Committee (FOMC) meeting regarding the core monetary policy will be ending today afternoon. Per the CME Group FedWatch tool, there is a 100% chance that interest rates will be left unchanged this time as well.
The central bank’s decision will not be a surprise for the markets as in the June FOMC meeting, interest rates were left at 0.00-0.25%, with indications that it will be at the same level through 2022.
Further, in late August, the Fed announced a major change in its inflation policy, seeking to support the fall in unemployment level by targeting an inflation that averages 2% over time.
In order to balance for the periods of weaker performance by allowing inflation rates to go beyond 2%, the Fed might be looking to keep interest rates at near zero level for an even longer period, likely till 2023.
Can Upbeat Outlook Revision be Expected?
A slew of encouraging data indicating that the U.S. economy is gradually returning to the pre-pandemic level is instilling optimism among investors. Unemployment rate has been declining consistently on gradual resumption of economic activity and the Fed’s efforts to support the economy. However, the level is still quite high when compared with pre-pandemic levels.
YTD Unemployment Rate
Further, per the latest report by Institute for Supply Management, U.S. manufacturing activity increased for the fourth month in a row in August owing to solid new orders. Also, improving housing market and retail sales might make central bank give an upbeat outlook.
Where do Finance Stocks Stand?
The companies continued with their restructuring and streamlining initiatives, which are likely to help to attract more business and fuel revenue growth. Moreover, global expansion to diversify sources of revenues remains in the cards.
Also, a gradual revival of M&As is expected as valuations have dipped significantly for many companies affected by the coronavirus-related mayhem, making them attractive buyout choices. Thus, advisors are likely to be on a roll.
Further, low interest rates might have maintained the demand for bond issuances. Strong equity markets is expected to have resulted in rise in asset values, thereby, supporting asset managers. Also, continued volatility in the markets is likely to have kept trading desks busy, leading to rise in client activities and helping brokers earn higher related fees.
Notably, the main driving factor for the finance sector is overall health of the nation. Thus, positive economic data and the central bank’s purchase of trillions of dollars of bonds and lending programs to help businesses are expected support the sector.
Picking the Winning Finance Stocks
With the help of the Zacks Stock Screener, we have selected four stocks from the finance sector that investors can consider based on fundamental strength and solid prospects. These stocks have long-term earnings growth expectation of 5% or more and have a market cap of more than $1 billion. Also, the stocks have outperformed the S&P 500 so far this year.
These companies currently carry a Zacks Rank #2 (Buy) or better. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Here are the four finance stocks:
Headquartered at Milwaukee, WI, Artisan Partners Asset Management Inc. (APAM - Free Report) has a Zacks Rank #2 and a market cap of $3 billion. The company’s long-term earnings are expected to grow at a rate of 11.3%. It has soared 18.1% so far this year.
Moody's Corporation (MCO - Free Report) , based in New York, carries a Zacks Rank #2 and has a market cap of $53.9 billion. The company’s long-term earnings are projected to increase at a rate of 10%. The stock has jumped 20.9% year to date.
With market cap of $21.1 billion, Nasdaq, Inc. (NDAQ - Free Report) has a Zacks Rank #2. This New York-based company’s long-term earnings are expected to be up at a rate of 8.6%. The company’s shares have rallied 19.7% so far this year.
Virtus Investment Partners’ (VRTS - Free Report) shares have gained 11.8% year to date. The company is headquartered at Hartford, CT, and has a market cap of $1.04 billion. The long-term earnings of this Zacks #1 Ranked stock are expected to rise at a rate of 5%.
YTD Price Performance
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>