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Wall Street to Rally as Powell Talks Recovery: 5 Big Winners

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Fed Chair Jerome Powell recently said that the path to economic recovery post the pandemic maybe slow but one shouldn’t doubt the economy’s capabilities.
 
Lower-than-expected economic growth in the first quarter coupled with weak April retail sales data force economists to apprehend an even steeper decline in the second quarter. But Powell expressed optimism and believes that the economy will start recovering in the second half of this year, provided there isn’t a second wave of coronavirus. He thinks that economic growth will improve in the July-September quarter, and “it will take some time to peak.” However, he admitted that a full recovery is possible only after the arrival of a vaccine.
 
Powell has also said that the central bank has enough ammunition to help the economy sail through these trying times. He has categorically mentioned that there is “no limit” to what the Fed can do to inject money into financial markets.  
 
Policy makers, by the way, trimmed benchmark federal funds rate a full percentage point to a range of zero to 0.25% in March. Moreover, the Fed renewed its quantitative easing program and said that the central bank will purchase $500 billion in Treasury bonds and $200 billion in mortgage-backed securities.
 
By trimming its short-term interest rates and at the same time renewing its crisis era bond-purchasing program, the Fed aimed at pumping cash into the financial system and help banks provide more loans to businesses and households.
 
The Fed had also encouraged big U.S. banks to use the almost $4 trillion kept aside for emergencies to lend to households and distressed firms. Those buffers are specially designed to provide additional cushion at times of financial calamities.
 
Powell, in the meantime, did acknowledge that the unemployment rate could hit a peak of 20-25%, levels not seen since the Great Depression. But still, Powell doesn’t fear a second depression for the United States in the near future. He said that “it should be a much shorter downturn than we would associate with the Great Depression of the 1930s.” He added that “in the long run and even in the medium run, you wouldn’t want to bet against the American economy.”
 
Powell’s Optimism to Buoy Wall Street: 5 Picks
 
As Wall Street is poised to gain traction after Powell expressed confidence that the U.S. economic recovery may begin by summer, investing in stocks that can make the most of the current bullish scenario seems prudent. Such stocks flaunt a Zacks Rank #1 (Strong Buy) and a Growth Score of A. 
 
The Hain Celestial Group, Inc. (HAIN - Free Report) manufactures, markets, distributes, and sells organic and natural products. The Zacks Consensus Estimate for its current-year earnings has risen 11.3% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 28.6% and 19.7%, respectively.
 
Murphy USA Inc. (MUSA - Free Report) engages in the marketing of retail motor fuel products and convenience merchandise. The Zacks Consensus Estimate for its current-year earnings has climbed 56.6% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 214.9% and 68.3%, respectively.
 
Vertex Pharmaceuticals Incorporated (VRTX - Free Report) engages in developing and commercializing therapies for treating cystic fibrosis. The Zacks Consensus Estimate for its current-year earnings has moved 15.8% north over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 65.9% and 65.1%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Sprouts Farmers Market, Inc. (SFM - Free Report) provides fresh, natural, and organic food products in the United States. The Zacks Consensus Estimate for its current-year earnings has risen 26.6% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 13.3% and 29.6%, respectively.
 
ASE Technology Holding Co., Ltd. (ASX - Free Report) provides a range of semiconductors packaging and testing, and electronic manufacturing services. The Zacks Consensus Estimate for its current-year earnings has moved up 2.8% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 48% and 16.2%, respectively.
 
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