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Fed Signals Multiple Rate Cuts in 2024: 5 Solid Stocks to Buy
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Wall Street has been on a rally since November, and stocks are headed not only to end this year on a high but also to start 2024 on a promising note. The Dow, the S&P 500 and the Nasdaq are up 3.8%, 3.3% and 4.1%, respectively, so far in December.
The renewed optimism comes as the Federal Reserve finally gave a clear picture of its interest rate hikes in its December policy meeting. The Federal Reserve left interest rates unchanged in its current range of 5.25-5.50% for the third straight time as inflation has continued to show signs of a steady decline over the past year after reaching a 40-year high.
Federal Reserve Chairman Jerome Powell said in the post-FOMC meeting press conference that he believes that the policy rate is now at its peak or at least near it. He also said that the Fed will closely monitor inflation data and will try not to keep interest rates high for a longer period.
The Federal Reserve increased interest rates by 525 basis points since March 2022 from its range of 0-0.25% to 5.25-5.50%, which saw inflation decline sharply from the peak of 9.1% in June 2022.
Investors were already optimistic that the Federal Reserve would leave interest rates unaltered in its December meeting. However, the wait was for the rate cuts. The majority of Fed officials now believe that at least three rate cuts of 25 basis each could be implemented in 2024.
The central bank now expects its policy rate to be at 4.6% by the end of 2024, a lot lower than the earlier forecast of 5.1%. Moreover, market participants now believe that the first of the rate cuts could come as early as March.
Optimism surrounding multiple rate cuts in 2024 has also heightened the chance of a soft landing and a further decline in inflation. Lower borrowing costs bode well for several sectors.
People have been spending cautiously for a long time, but lower interest rates will give them a chance to spend more freely. Given this situation, investing in consumer discretionary stocks seems to be an ideal choice.
Our Choices
We have identified five stocks from the consumer discretionary sector that are likely to benefit from the Fed’s indication toward going for multiple rate cuts in 2024. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Caribbean Cruises Ltd. (RCL - Free Report) owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Additionally, RCL has a 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises. Royal Caribbean Cruises' brands primarily serve the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments.
Royal Caribbean Cruises' expected earnings growth rate for the current year is 187.9%. The Zacks Consensus Estimate for current-year earnings has improved 7.9% over the past 60 days. RCL currently sports a Zacks Rank #1.
Lululemon Athletica Inc. (LULU - Free Report) designs, manufactures and distributes athletic apparel and accessories for women, men and female youth. LULU offers a line of apparel assortment, including fitness pants, shorts, tops and jackets designed for healthy lifestyle and athletic pursuits, such as yoga, training, and running, as well as other sweaty and general fitness under the lululemon athletica brand name.
Lululemon Athletica’s expected earnings growth rate for the current year is 22.9%. The Zacks Consensus Estimate for the current-year earnings has improved 2.1% over the past 60 days. LULU presently carries a Zacks Rank #2.
Comcast Corporation (CMCSA - Free Report) is a global media and technology company with three primary businesses: Comcast Cable, NBCUniversal and Sky. Beginning first-quarter 2023, CMCSA changed its presentation of segment operating results around its two primary businesses, Connectivity & Platforms and Content & Experiences.
Comcast Corporation’s expected earnings growth rate for the current year is 8.2%. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 60 days. CMCSA presently carries a Zacks Rank #2.
Live Nation Entertainment, Inc. (LYV - Free Report) operates as a live entertainment company. LYV operates through the Concerts, Ticketing, and Sponsorship and Advertising segments. Live Nation Entertainment has more than 580 million fans across all of its concerts and ticketing platforms in 46 countries.
Live Nation Entertainment’s expected earnings growth rate for the current year is 132.8%. The Zacks Consensus Estimate for current-year earnings has improved 46.1% over the past 60 days. LYV presently has a Zacks Rank #2.
Skechers U.S.A., Inc. (SKX - Free Report) designs, develops, markets and distributes footwear for men, women, and children in the United States and overseas under the SKECHERS name, as well as under several uniquely branded names. SKX has distribution networks and joint venture partners in Asia and the Middle East, and wholly-owned subsidiaries in Canada, Japan, throughout Europe and Latin America.
Skechers U.S.A.’s expected earnings growth rate for the current year is 44.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the past 60 days. SKXpresently has a Zacks Rank #2.
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Fed Signals Multiple Rate Cuts in 2024: 5 Solid Stocks to Buy
Wall Street has been on a rally since November, and stocks are headed not only to end this year on a high but also to start 2024 on a promising note. The Dow, the S&P 500 and the Nasdaq are up 3.8%, 3.3% and 4.1%, respectively, so far in December.
The renewed optimism comes as the Federal Reserve finally gave a clear picture of its interest rate hikes in its December policy meeting. The Federal Reserve left interest rates unchanged in its current range of 5.25-5.50% for the third straight time as inflation has continued to show signs of a steady decline over the past year after reaching a 40-year high.
Federal Reserve Chairman Jerome Powell said in the post-FOMC meeting press conference that he believes that the policy rate is now at its peak or at least near it. He also said that the Fed will closely monitor inflation data and will try not to keep interest rates high for a longer period.
The Federal Reserve increased interest rates by 525 basis points since March 2022 from its range of 0-0.25% to 5.25-5.50%, which saw inflation decline sharply from the peak of 9.1% in June 2022.
Investors were already optimistic that the Federal Reserve would leave interest rates unaltered in its December meeting. However, the wait was for the rate cuts. The majority of Fed officials now believe that at least three rate cuts of 25 basis each could be implemented in 2024.
The central bank now expects its policy rate to be at 4.6% by the end of 2024, a lot lower than the earlier forecast of 5.1%. Moreover, market participants now believe that the first of the rate cuts could come as early as March.
Optimism surrounding multiple rate cuts in 2024 has also heightened the chance of a soft landing and a further decline in inflation. Lower borrowing costs bode well for several sectors.
People have been spending cautiously for a long time, but lower interest rates will give them a chance to spend more freely. Given this situation, investing in consumer discretionary stocks seems to be an ideal choice.
Our Choices
We have identified five stocks from the consumer discretionary sector that are likely to benefit from the Fed’s indication toward going for multiple rate cuts in 2024. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Caribbean Cruises Ltd. (RCL - Free Report) owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Additionally, RCL has a 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises. Royal Caribbean Cruises' brands primarily serve the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments.
Royal Caribbean Cruises' expected earnings growth rate for the current year is 187.9%. The Zacks Consensus Estimate for current-year earnings has improved 7.9% over the past 60 days. RCL currently sports a Zacks Rank #1.
Lululemon Athletica Inc. (LULU - Free Report) designs, manufactures and distributes athletic apparel and accessories for women, men and female youth. LULU offers a line of apparel assortment, including fitness pants, shorts, tops and jackets designed for healthy lifestyle and athletic pursuits, such as yoga, training, and running, as well as other sweaty and general fitness under the lululemon athletica brand name.
Lululemon Athletica’s expected earnings growth rate for the current year is 22.9%. The Zacks Consensus Estimate for the current-year earnings has improved 2.1% over the past 60 days. LULU presently carries a Zacks Rank #2.
Comcast Corporation (CMCSA - Free Report) is a global media and technology company with three primary businesses: Comcast Cable, NBCUniversal and Sky. Beginning first-quarter 2023, CMCSA changed its presentation of segment operating results around its two primary businesses, Connectivity & Platforms and Content & Experiences.
Comcast Corporation’s expected earnings growth rate for the current year is 8.2%. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 60 days. CMCSA presently carries a Zacks Rank #2.
Live Nation Entertainment, Inc. (LYV - Free Report) operates as a live entertainment company. LYV operates through the Concerts, Ticketing, and Sponsorship and Advertising segments. Live Nation Entertainment has more than 580 million fans across all of its concerts and ticketing platforms in 46 countries.
Live Nation Entertainment’s expected earnings growth rate for the current year is 132.8%. The Zacks Consensus Estimate for current-year earnings has improved 46.1% over the past 60 days. LYV presently has a Zacks Rank #2.
Skechers U.S.A., Inc. (SKX - Free Report) designs, develops, markets and distributes footwear for men, women, and children in the United States and overseas under the SKECHERS name, as well as under several uniquely branded names. SKX has distribution networks and joint venture partners in Asia and the Middle East, and wholly-owned subsidiaries in Canada, Japan, throughout Europe and Latin America.
Skechers U.S.A.’s expected earnings growth rate for the current year is 44.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the past 60 days. SKXpresently has a Zacks Rank #2.