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.
Beyond AI, 6 Factors That Wall Street Could Gain From in 2H
Read MoreHide Full Article
The second half of 2023 is expected to offer new record highs on Wall Street, according to bullish strategist Tom Lee of Fundstrat, as quoted on Yahoo Finance. While many analysts have attributed the likely rally to advancements in artificial intelligence (AI), Lee emphasizes several other factors that could drive the stock markets higher. Let’s find out what those winning factors are.
Falling Inflation and a Resilient Economy
Lee highlights falling inflation as a key factor contributing to the positive outlook for stocks. Although the core Personal Consumption Expenditures Index increased by 4.6% in May, it represents a substantial decrease from the peak inflation rate of over 9% observed just a year ago. This decline in inflation may inspire the Fed to go slow in the policy tightening, which supports the bullish sentiment for stocks.
Resilient Consumer
The consumer savings pattern is an economic indicator that provides insight into the financial health of households. In May 2023, the personal savings rate in the United States amounted to 4.6%. Though the savings rate got hurt by higher inflation and slower wage growth, the current rate has improved from June 2022, when it had slipped to a 15-year low of 2.7%.
In this regard, GIII Apparel Group (GIII - Free Report) could emerge as a good pick. The manufacturer, designer and distributor of apparel and accessories currently has a Zacks Rank #1 (Strong Buy). The stock has a VGM (value, growth, momenutm) score of A.
Solid Cash Reserves on the Sidelines
According to Lee, there is a substantial amount of sidelined cash, which amounts to a whopping $5.5 trillion. Notably, data from Pantheon Macro reveals that the top 1% of households has increased its cash balance by 52% since 2019, while the 80th to 99th percentile boosted their cash balances by 32%. As confidence builds up, investors may be interested in using their cash reserves in the markets, which will provide Wall Street an upward momentum.
In this regard, SEI Investments (SEIC - Free Report) could emerge as a good pick. This asset management company is a leading provider of wealth management business solutions in the financial services industry. The company offers investment processing, management and operations solutions globally. The Zacks Rank #2 (Buy) stock has a VGM score of A.
A New Bull Market
Fundstrat boosted its full-year price target for the S&P 500 from 4,750 to 4,825 in its 2023 mid-year outlook. Lee believes that a new bull market is taking root. An ebbing recession is probably playing a key role in boosting the market. Market veteran Ed Yardeni boosted Q2 real GDP forecast from 1.0% to 2.0%, followed by 2.0% in Q3 and Q4, as quoted on CNBC.
Rebound in Homebuilding Sector
The housing sector has marked a solid improvement in almost all parameters. In May, the sale of existing homes grew and surpassed estimates. Moreover, U.S. home prices recorded the first annual fall in 11 years, which is likely to boost sales. New home sales have also been strong, and so have been builders’ sentiments.
Yardeni indicated that large parts of the residential real-estate sector had been in a recession for the past eight quarters. But according to Yardeni, now the space is bouncing back strongly enough to keep the economy and markets afloat.
In this context, Meritage Homes (MTH - Free Report) is an intriguing pick. It is one of the leading designers and builders of single-family homes. The Zacks Rank #2 stock has a VGM score of A.
Massive Infrastructure Spending
Per the CNBC article, Yardeni believes that massive spending on infrastructure and efforts to bring manufacturing back to America is boosting the economy. The Inflation Reduction Act has been effected before an actual recession hits.
In this context, EMCOR Group (EME - Free Report) is a compelling pick. It is one of the leading providers of mechanical and electrical construction, industrial and energy infrastructure, as well as building services for a diverse range of businesses. The company serves commercial, industrial, utility and institutional clients. The Zacks Rank #2 stock has a VGM score of B.
Tech Stocks and Other Cyclicals Lead the Way
Lee recommends focusing on tech stocks, industrials and energy sectors. Hence, Zacks Rank #1 stock Similarweb (SMWB - Free Report) , which is a website providing web analytics services for businesses, may fare better in the second half of 2023. The stock has a VGM score of C.
As far as the industrials sector is concerned, Zacks Rank #2 W.W. Grainger (GWW - Free Report) comes across as a winning pick. The stock has a VGM score of B. It is a broad-line, business-to-business distributor of maintenance, repair and operating products and services. Its operations are primarily in North America, Japan and the U.K.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Beyond AI, 6 Factors That Wall Street Could Gain From in 2H
The second half of 2023 is expected to offer new record highs on Wall Street, according to bullish strategist Tom Lee of Fundstrat, as quoted on Yahoo Finance. While many analysts have attributed the likely rally to advancements in artificial intelligence (AI), Lee emphasizes several other factors that could drive the stock markets higher. Let’s find out what those winning factors are.
Falling Inflation and a Resilient Economy
Lee highlights falling inflation as a key factor contributing to the positive outlook for stocks. Although the core Personal Consumption Expenditures Index increased by 4.6% in May, it represents a substantial decrease from the peak inflation rate of over 9% observed just a year ago. This decline in inflation may inspire the Fed to go slow in the policy tightening, which supports the bullish sentiment for stocks.
Resilient Consumer
The consumer savings pattern is an economic indicator that provides insight into the financial health of households. In May 2023, the personal savings rate in the United States amounted to 4.6%. Though the savings rate got hurt by higher inflation and slower wage growth, the current rate has improved from June 2022, when it had slipped to a 15-year low of 2.7%.
In this regard, GIII Apparel Group (GIII - Free Report) could emerge as a good pick. The manufacturer, designer and distributor of apparel and accessories currently has a Zacks Rank #1 (Strong Buy). The stock has a VGM (value, growth, momenutm) score of A.
Solid Cash Reserves on the Sidelines
According to Lee, there is a substantial amount of sidelined cash, which amounts to a whopping $5.5 trillion. Notably, data from Pantheon Macro reveals that the top 1% of households has increased its cash balance by 52% since 2019, while the 80th to 99th percentile boosted their cash balances by 32%. As confidence builds up, investors may be interested in using their cash reserves in the markets, which will provide Wall Street an upward momentum.
In this regard, SEI Investments (SEIC - Free Report) could emerge as a good pick. This asset management company is a leading provider of wealth management business solutions in the financial services industry. The company offers investment processing, management and operations solutions globally. The Zacks Rank #2 (Buy) stock has a VGM score of A.
A New Bull Market
Fundstrat boosted its full-year price target for the S&P 500 from 4,750 to 4,825 in its 2023 mid-year outlook. Lee believes that a new bull market is taking root. An ebbing recession is probably playing a key role in boosting the market. Market veteran Ed Yardeni boosted Q2 real GDP forecast from 1.0% to 2.0%, followed by 2.0% in Q3 and Q4, as quoted on CNBC.
Rebound in Homebuilding Sector
The housing sector has marked a solid improvement in almost all parameters. In May, the sale of existing homes grew and surpassed estimates. Moreover, U.S. home prices recorded the first annual fall in 11 years, which is likely to boost sales. New home sales have also been strong, and so have been builders’ sentiments.
Yardeni indicated that large parts of the residential real-estate sector had been in a recession for the past eight quarters. But according to Yardeni, now the space is bouncing back strongly enough to keep the economy and markets afloat.
In this context, Meritage Homes (MTH - Free Report) is an intriguing pick. It is one of the leading designers and builders of single-family homes. The Zacks Rank #2 stock has a VGM score of A.
Massive Infrastructure Spending
Per the CNBC article, Yardeni believes that massive spending on infrastructure and efforts to bring manufacturing back to America is boosting the economy. The Inflation Reduction Act has been effected before an actual recession hits.
In this context, EMCOR Group (EME - Free Report) is a compelling pick. It is one of the leading providers of mechanical and electrical construction, industrial and energy infrastructure, as well as building services for a diverse range of businesses. The company serves commercial, industrial, utility and institutional clients. The Zacks Rank #2 stock has a VGM score of B.
Tech Stocks and Other Cyclicals Lead the Way
Lee recommends focusing on tech stocks, industrials and energy sectors. Hence, Zacks Rank #1 stock Similarweb (SMWB - Free Report) , which is a website providing web analytics services for businesses, may fare better in the second half of 2023. The stock has a VGM score of C.
As far as the industrials sector is concerned, Zacks Rank #2 W.W. Grainger (GWW - Free Report) comes across as a winning pick. The stock has a VGM score of B. It is a broad-line, business-to-business distributor of maintenance, repair and operating products and services. Its operations are primarily in North America, Japan and the U.K.