The Zacks Analyst Blog Highlights: AES, MDU Resources, American States Water And PPL
Zacks Investment Research | Sep 19, 2019 11:00PM ET
For Immediate Release
Chicago, IL – September 20, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: The AES Corporation (NYSE:AES) , MDU Resources Group, Inc. (NYSE:MDU) , American States Water Company (NYSE:AWR) and PPL Corporation (NYSE:PPL) .
Here are highlights from Thursday’s Analyst Blog:
Fed Cuts Rates Again: 4 Utilities to Buy
As expected, the Federal Reserve announced another round of interest rate cut in yesterday’s meeting. The central bank cut interest rate by 25 basis points and lowered the federal funds rate to 1.75% to 2%. The rate cut comes despite increase in household spending. The recent interest rate cut considers the uncertainties that still prevail in the U.S. economy. In addition, the ongoing trade dispute between the United States and China has also added to the uncertainty.
After raising interest rates nine times since December 2015 from a near zero level, the Federal Reserve finally cut rates in July 2019, citing weakness in the economy. The back-to-back interest rate cut reflects the fact that the U.S. economy is yet to show signs of stability. The Fed members considered the weakness in business fixed investment and exports while reducing rates.
Rate hikes are welcomed by some sectors like banking in anticipation of higher interest income. Capital intensive, highly levered utility stocks gain from rate cuts as these lower cost of capital. The decline in rate enables utilities to source funds at a cheaper rate, continue with infrastructure upgrade and pay out regular dividend to shareholders.
Are More Cuts on the Way?
Per Trading Economies, the U.S. economy grew by an annualized 2% in the second quarter of 2019, down from 3.1% expansion in the first quarter. The Fed expects U.S. GDP to increase by 2.2% in 2019 and 1.9% in 2021, up marginally from its earlier projection of 2.1% and 1.8% respectively. However, for 2020 GDP is expected to remain unchanged at 2%.
The Fed also provided an updated view on unemployment. Fed officials expect the unemployment rate at 3.7% for 2019, up from 3.6% expected at its June meeting. For 2020 and 2021, the projected unemployment rate remains unchanged at 3.7% and 3.8%, respectively. In the long term, unemployment is estimated to be 4.2%, unchanged from June expectation.
Taking into consideration the above factors Fed officials expect 2019 interest rate at 1.9%, down from the June projection of 2.4%. For 2020 and 2021 rates are expected to drop to 1.9% and 2.1% from 2.1% and 2.4%, respectively, projected in the June meeting. These projections indicate that we might see further rate cuts but not in the immediate quarters.
Utilities Remain Attractive
It’s an intimidating task to zero in on stocks with strong potential. The Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.