Investor appetite for risk seems to have improved as evident from aggressive buying of stocks on Mar 24, which helped the Dow notch it’s biggest one-day jump since 1933. In fact, the blue-chip index registered its biggest one-day point gain ever, just a day after the index plummeted to its lowest level since 2016. Notably, it’s just not the blue-chip index that rebounded yesterday, the broader S&P 500 bounced back too from its lowest level since 2016 to notch its biggest one-day gain since October 2008.
Investor sentiments received a massive boost following reports that Congress is closing in on an unparalleled spending bill aimed to prop up the ailing economy. The coronavirus outbreak has taken its toll on the economy, and now lawmakers are negotiating the final sticking points a rescue package worth almost $2 trillion.
Both Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer have said that they are inching toward an agreement to aid an economic shutdown by the pandemic. House Speaker Nancy Pelosi too announced that a deal can be struck in hours. Pelosi added that there might be an agreement to provide $500 billion fund to those companies that have been affected by the economic shutdown.
By the way, the rescue package is aimed at providing checks to Americans, increasing unemployment insurance and a lending program that will help both small and midsized business houses to prosper by utilizing the Fed’s emergency lending powers.
President Trump, incidentally, said that he may restart the economy soon to curb the damage on small and midsized businesses. In fact, Trump’s idea did fuel some staunch stock market bulls. CFRA’s Stovall added that “there’s optimism based on what the president said, and that investors are feeling encouraged that this lockdown will not extend into the third quarter.”
Meanwhile, the Fed has stepped up and unleashed an array of stimulus measures to date. The central bank said that it would buy an unlimited amount of Treasurys and mortgage-backed securities to stem the economic damage from the coronavirus outbreak. It’s worth noting that coronavirus pandemic continues to ravage countries and some economies have almost grinded to a halt.
Policy makers had already trimmed benchmark federal funds rate a full percentage point to a range of zero to 0.25%
. By trimming its short-term interest rates and renewing its crisis era bond-purchasing program at the same time, the Fed aims to pump cash into the financial system, and help banks provide more loans to businesses and households.
5 Blue-Chip Stocks That Soared At Least 10%
Thanks to the aforementioned bullish factors, there has been a particularly sharp run up among the components in the 120-year-old index on Mar 24. We have, thus, highlighted such components of the benchmark index that were up 10% or more.
Further, once the pandemic ebbs, these stocks are slated to gain on large market capitalization, strong balance sheet and solid cash flow.
Notable among them are American Express Company
(AXP - Free Report
) , McDonald's Corporation
(MCD - Free Report
) , TheWalt Disney Company
(DIS - Free Report
) , UnitedHealth Group Incorporated
(UNH - Free Report
) and International Business Machines Corporation
(IBM - Free Report
) , whose shares gained 21.9%, 18.1%, 14.4%, 12.8% and 11.3%, respectively, on Mar 24. Have a look –
American Express’ growth scenario looks promising given the increase in shift toward digital payments, strategic initiatives, strong global reach and a solid capital position. The company’s expected earnings growth rate for the current quarter and year is 3.5% and 2.1%, respectively. In fact, the company’s projected earnings growth rate for the next year is a much better 11.6%.
McDonald’s efforts to strengthen position through various sales initiatives and increased focus on franchising bode well. The company’s expected earnings growth rate for the current quarter and year is 9.9% and 8.2%, respectively. Moreover, the company’s projected earnings growth rate for the next year is 7.8%.
Meanwhile, acquisition of majority of Fox’s assets, impressive line-up of big budget movies, launch of direct-to-consumer service and robust visitor growth rate are key catalysts for Disney. The company not only witnessed its shares notch their largest single-day percentage gain since 2008 on Mar 24 but also has plenty of room to scale north in the near term. In fact, the company’s projected earnings growth rate for the next year is also a whopping 25.9%.
UnitedHealth’s continued strong growth at Optum and UnitedHealthcare segments are driving revenues. Its favorable government business and strong capital position are other positives. The company’s expected earnings growth rate for the next quarter and current year is 16.7% and 9%, respectively. In fact, the company’s projected earnings growth rate for the next year is even more encouraging, up 15.7%.
IBM currently has gained a lot from its improving position in the hosted cloud, security and analytics domains. Expanding product portfolio, accretive acquisitions, strong free cash flow generating ability and aggressive share buyback are IBM’s key positives. The company’s expected earnings growth rate for the current and next year is 4.3% and 6.3%, respectively.
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 2020.