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5 Top Blue Chip Stocks to Buy as Dow Breezes Past 32,000

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The blue-chip Dow zoomed past the coveted 32,000-mark for the first time ever on Mar 10, with the majority of its components ending in the green. The record upside can primarily be attributed to tepid consumer prices last month, which eased concerns about higher inflation, and subsequently tighter monetary policy in the near future. In fact, easy monetary policy that has been prevailing for quite some time helped the economy vis-à-vis the stock market to chug along.

In the month of February, the cost of apparel, cars, and other transportation services decreased compared to the previous month, indicating inflationary pressure remains subdued. After all, as mentioned in a Bloomberg article, the Labor Department stated that the broader consumer price index (CPI) increased 0.4% from the prior month, which is way less than the Fed’s desired target of 2%, before tightening monetary policy.

Notably, the core consumer price index that doesn’t include food and energy expenses, increased a meager 0.1% month over month. The Bloomberg article stated that analysts’ had expected the core measure to increase 0.2%.

Needless to say, that inflation remained subdued as demand for products across several sectors was weak, thanks to the onslaught of the coronavirus pandemic on the economy especially last year. However, the economy is all set to improve this year, and such optimism is also lifting stocks higher.

Particularly, stocks from the economically-sensitive sectors like energy and financials gained steam; eventually helping the Dow hit a record high. Meanwhile, high-flying tech stocks took a beating and the tech-laden Nasdaq remained in correction yesterday. Lofty valuations are primarily responsible for tech’s downfall.

Nonetheless, the economy is showing a sign of improvement as the pace of vaccination has improved considerably in recent times. As mentioned in a MarketWatch article, the coronavirus vaccination pace soared to 2.2% million a day and is likely to improve further. The MarketWatch article further stated that almost 18% of Americans have received their first shot and most of the adults can expect to get vaccinated by May.

More vaccinations, no doubt, should reduce the spread of the deadly virus, lift restrictions and help economic activities to pick up. Americans are more likely to venture out from their homes and spend as they gradually return to normalcy. More spending, in turn, is likely to spur corporate to hire, reduce the jobless rate and provide momentum to the economy.

The economy, by the way, is also expected to get a boost from the Biden administration’s massive $1.9 trillion coronavirus relief aid, once signed into law. In fact, recently, the House has passed the relief bill and has sent it to President Biden to sign. As part of the relief program, Americans will get stimulus checks, jobless people will get extra benefits and small corporate houses will receive handsome aids as well.

5 Blue-Chip Stocks to Invest In Now

Given the aforementioned bullishness, the 30-stock index has not only witnessed a sharp run up at present but also is poised to gain traction since its components have traits like large market cap, solid balance sheet and strong cash flows. We have, thus, selected five such blue-chip stocks that carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Caterpillar Inc. (CAT - Free Report) is the largest global manufacturer of construction and mining equipment. The Zacks Consensus Estimate for its current-year earnings increased 6.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 21.8%. Its shares gained almost 2% on Mar 10.

The Goldman Sachs Group, Inc. (GS - Free Report) is a leading global financial holding company providing investment banking, securities and investment management services to a diversified client base. The Zacks Consensus Estimate for its current-year earnings increased 15.6% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 22%. Its shares surged 3.5% on Mar 10.

Johnson & Johnson’s (JNJ - Free Report) biggest strength is its diversified business model. It operates through pharmaceuticals, medical devices and consumer products divisions. The Zacks Consensus Estimate for its current-year earnings increased 6.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 18.1%. Its shares gained 0.9% on Mar 10.

The Travelers Companies, Inc. (TRV - Free Report) is principally engaged, through its subsidiaries, in providing a wide variety of property and casualty insurance and surety products and services to businesses, organizations and individuals in the United States. The Zacks Consensus Estimate for its current-year earnings increased 11.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 10.6%. Its shares appreciated 1% on Mar 10.

Dow Inc. (DOW - Free Report) is a material science company, providing a world-class portfolio of advanced, sustainable and leading-edge products. The Zacks Consensus Estimate for its current-year earnings increased 30.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 125.9%. Its shares climbed 2.9% on Mar 10.

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