4 Top Stocks To Buy As Fears Of Recession Subside
Zacks Investment Research | Feb 12, 2018 12:30AM ET
With erratic movements of major market indices last week, many analysts found it quite tricky to spot the prime factor behind the extreme volatility.
Although The Dow Jones Industrial Average rose 1.4% on Feb 9 after a wild week, fears of a downturn in the near future gripped the market.
However, chances of a recession are negligible given record low unemployment levels and better-than-expected job additions. Favorable fourth-quarter earnings also acted as an antidote.
Markets Bled Last Week
On average, the Dow moved more than 1,000 points every day through the week. The market saw the index alter directions roughly 53 times, per The Wall Street Journal. Moreover, the weekly decline of 5.2% for the index was the steepest in more than two years.
The encouraging wage growth data convinced investors of a probable spike in inflation, which might lead the central bank to raise interest rates sooner than expected. Per the Bureau of Labor Statistics, private sector workers witnessed 2.9% year-over-year wage growth in January, the highest since June 2009. The fear of impending inflation led the 10% drop in Dow from the record-high mark of Jan 26.
Chances of Recession Negligible
Most analysts believe that the market was overdue for a correction and major indices might even plunge further, but that will not lead to a recession anytime soon. The signs of recession are normally reflected in indicators like GDP and employment data, and these parameters show no signs of a recession.
GDP Data Solid: The nation’s GDP increased at a seasonally adjusted annual rate of 2.6% in the final three months of 2017, following gains in the previous two quarters of more than 3%, per the “advance” estimate released by the Bureau of Economic Analysis. In fact, this marked the economy’s strongest stretch of growth since the expansion started in mid-2009.
Notably, in the first quarter of this year, GDP might jump Zacks Investment Research
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