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.
4 Stocks Well-Poised to Gain From Rate Cut Optimism
Read MoreHide Full Article
As inflation cools down and consumer outlays ebb, market pundits have become more optimistic that the Federal Reserve might implement at least two interest rate cuts this year.
Consumer prices resumed a downward trend in April, with the consumer price index (CPI) increasing 3.4% year over year last month, less than the 3.5% rise in the prior month. The annual rise in consumer prices has dropped considerably from the peak of 9.1% in June 2022.
The core CPI, which doesn’t include the volatile energy and food costs, also recorded its lowest annual increase in April since the beginning of 2021. The core CPI increased 3.6% annually last month, down from the 3.8% rise in March.
Meanwhile, sales at U.S. retailers remained flat in April, whereas analysts had expected an improvement. The wage growth decline and fewer job additions impacted consumers’ spending tendencies.
This means the Fed will become more dovish, and market participants are currently pricing in a 64.8% chance of a quarter-point interest rate cut at the central bank’s September policy meeting, per the CME FedWatch Tool.
The hopefulness related to interest rate cuts bolstered gold prices. This is because investors tend to gravitate toward the yellow metal over income-generating assets such as bonds during a declining interest rate environment.
Additionally, an uptick in demand for gold in China and a renewed geopolitical crisis in the Middle East pushed gold prices to record highs. Gold prices have soared more than 18% so far this year, easily outperforming equities and bonds.
Canada-based largest gold mining company, Barrick Gold, operates in the United States. The Zacks Consensus Estimate for its current-year earnings has increased 12.2% over the past 60 days. GOLD’s expected earnings growth rate for the current year is 20.2%.
Similarly, Kinross Gold holds major assets in Canada and the United States and is largely involved in the operation of gold mines. The Zacks Consensus Estimate for its current-year earnings has increased 48.5% over the past 60 days. KGC’s expected earnings growth rate for the current year is 11.4%.
Like gold, a lower interest rate scenario bodes well for tech players and capital-intensive utility companies. Decreasing interest rates doesn’t affect tech companies’ future cash inflows, while the debt level decreases for utility companies, helping them pay off dues and register profits. Thus, low interest rates will work wonders for stocks such as NVIDIA Corporation (NVDA - Free Report) and Atmos Energy Corporation (ATO - Free Report) . These stocks currently flaunt a Zacks Rank #2 (Buy) each.
NVIDIA is a pioneer in visual computing technologies and the inventor of the graphic processing unit. The Zacks Consensus Estimate for its current-year earnings has increased 1.8% over the past 60 days. NVDA’s expected earnings growth rate for the current year is nearly 88% (read more: NVIDIA a Solid Buy as it Squashes Bubble Fears).
Atmos Energy, on the other hand, is engaged in the regulated natural gas distribution and storage business. The Zacks Consensus Estimate for its current-year earnings has increased 0.9% over the past 60 days. ATO’s expected earnings growth for the current year is 9%.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
4 Stocks Well-Poised to Gain From Rate Cut Optimism
As inflation cools down and consumer outlays ebb, market pundits have become more optimistic that the Federal Reserve might implement at least two interest rate cuts this year.
Consumer prices resumed a downward trend in April, with the consumer price index (CPI) increasing 3.4% year over year last month, less than the 3.5% rise in the prior month. The annual rise in consumer prices has dropped considerably from the peak of 9.1% in June 2022.
The core CPI, which doesn’t include the volatile energy and food costs, also recorded its lowest annual increase in April since the beginning of 2021. The core CPI increased 3.6% annually last month, down from the 3.8% rise in March.
Meanwhile, sales at U.S. retailers remained flat in April, whereas analysts had expected an improvement. The wage growth decline and fewer job additions impacted consumers’ spending tendencies.
This means the Fed will become more dovish, and market participants are currently pricing in a 64.8% chance of a quarter-point interest rate cut at the central bank’s September policy meeting, per the CME FedWatch Tool.
The hopefulness related to interest rate cuts bolstered gold prices. This is because investors tend to gravitate toward the yellow metal over income-generating assets such as bonds during a declining interest rate environment.
Additionally, an uptick in demand for gold in China and a renewed geopolitical crisis in the Middle East pushed gold prices to record highs. Gold prices have soared more than 18% so far this year, easily outperforming equities and bonds.
As the bullion metal shines, gold mining stocks like Barrick Gold (GOLD - Free Report) and Kinross Gold (KGC - Free Report) have a fair chance to gain. These stocks currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Canada-based largest gold mining company, Barrick Gold, operates in the United States. The Zacks Consensus Estimate for its current-year earnings has increased 12.2% over the past 60 days. GOLD’s expected earnings growth rate for the current year is 20.2%.
Similarly, Kinross Gold holds major assets in Canada and the United States and is largely involved in the operation of gold mines. The Zacks Consensus Estimate for its current-year earnings has increased 48.5% over the past 60 days. KGC’s expected earnings growth rate for the current year is 11.4%.
Like gold, a lower interest rate scenario bodes well for tech players and capital-intensive utility companies. Decreasing interest rates doesn’t affect tech companies’ future cash inflows, while the debt level decreases for utility companies, helping them pay off dues and register profits. Thus, low interest rates will work wonders for stocks such as NVIDIA Corporation (NVDA - Free Report) and Atmos Energy Corporation (ATO - Free Report) . These stocks currently flaunt a Zacks Rank #2 (Buy) each.
NVIDIA is a pioneer in visual computing technologies and the inventor of the graphic processing unit. The Zacks Consensus Estimate for its current-year earnings has increased 1.8% over the past 60 days. NVDA’s expected earnings growth rate for the current year is nearly 88% (read more: NVIDIA a Solid Buy as it Squashes Bubble Fears).
Atmos Energy, on the other hand, is engaged in the regulated natural gas distribution and storage business. The Zacks Consensus Estimate for its current-year earnings has increased 0.9% over the past 60 days. ATO’s expected earnings growth for the current year is 9%.