Zacks Investment Research | Aug 24, 2021 05:33AM ET
Wall Street has performed impressively year to date after finishing an astonishing bull run in 2020, exiting the coronavirus-led short bear market. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 15.5%, 19.3% and 15.9%, respectively.
Despite this strong performance, a section of economists and financial researchers are worried that the U.S. economic recovery may have reached its peak and may slow down going forward.
A series of weak economic data, the rapid spread of the Delta string of coronavirus, a gradual fading out of fiscal stimulus and the possibility of an earlier-than-expected tapering of the Fed’s quantitative easing program may pull down the U.S. economy in the second half of 2021.
Nevertheless, U.S. economic fundamentals remain robust and the market’s northward journey is expected to continue for the rest of 2021 despite intermittent fluctuations. Several positives are there back up Wall Street’s bull run ahead.
In order to capture the market’s upside, one should invest in stocks with a favorable Zacks Rank that have strong potential for the rest of this year. On the other hand, to protect one’s portfolio from an unexpected downturn, high-yielding stocks with a favorable Zacks Rank that are regular dividend payers will be very lucrative. Combining these two criteria, we can construct a set of stocks that will enrich and protect one’s portfolio in terms of the market’s movement either way.
The resurgence of the highly-infectious Delta strain of coronavirus raised questions about the pace of economic recovery. In the United States, new cases are jumping significantly. The preliminary data of the Consumer Sentiment Index for August and IHS Markit’s services and manufacturing indexes for August dropped significantly.
The weekly unemployment benefit, as part of the fiscal stimulus, will terminate in September. This may reduce consumer spending. Retail sales plummeted 1.1% in July compared with the consensus estimate of a decline of 0.3%.
Moreover, there is growing speculation in the financial space that the Fed will start tapering its $120 billion per month bond-buy program as early as this year to curb mounting inflationary pressure. Any reduction in monetary stimulus may be detrimental to U.S. economic recovery.
U.S. businesses of all sizes are expanding their scale of operations and hiring more despite soaring wages and salaries to cater to robust demand. The personal savings of Americans are around an astonishing $2 trillion. The sky-high savings are allowing people to indulge in their demands that were pent up during lockdowns and in turn compelling businesses to expand their scale of operations.
On Aug 10, the U.S. Senate passed a bipartisan infrastructure bill of $550 billion in addition to the previously approved funds of $450 billion for five years. Total spending may go up to $1.2 trillion if the plan is extended to eight years.
Infrastructure projects such as roads, bridges, passenger rails, airports, drinking water and waste-water systems, high-speed Internet, and climate-related infrastructure will benefit. The bill is now headed to the House of Representatives for discussions and vote.
On Aug 23, the U.S. Food and Drug Administration (FDA) granted the first approval to the COVID-19 vaccine developed by Pfizer Inc. (NYSE:PFE) the complete list of today’s Zacks #1 Rank stocks here .
The chart below shows the price performance of our five picks year to date.
The Blackstone Group (NYSE:BX) Inc. AIG has been streamlining its core insurance operations thereby enhancing capital allocation and operating leverage. It has acquired Ellipse, a specialist provider of group life risk protection in the UK, from Munich Re.
The transaction has strengthened the company's position in Life & Retirement businesses. The buyout of Validus Holdings, Ltd. and Glatfelter Insurance Group, has also strengthened its global General Insurance business.
This Zacks Rank #2 company has an expected earnings growth rate of 93.7% for the current year. The Zacks Consensus Estimate for current-year earnings improved 2.5% over the last 7 days. It has a current dividend yield of 2.4%. The stock price has jumped 43% year to date.
Tech IPOs With Massive Profit Potential
In the past few years, many popular platforms and like Uber (NYSE:UBER) and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names.
For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way…
If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November.
With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup could be even more lucrative.
See Zacks Hottest Tech IPOs Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Zacks Investment Research
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