Yahoo Finance 5 Stocks Poised to Rally in 2024 as Inflation Declines Further
Markets have been on a rally as inflation continues to decline sharply, which has raised optimism about the Federal Reserve going for its first rate cut in the first quarter of 2024. Alongside, steady growth in personal income and spending is helping the economy grow.
The upbeat sentiment has seen all three major indexes rallying over the past few weeks.
The Dow, the S&P 500 and the Nasdaq added 0.2%, 0.8% and 1.2%, respectively, for the week to record their eighth straight week of gains. This is the longest weekly winning streak for the Dow since 2019 and for the S&P since 2017.
The Federal Reserve’s favorite inflation gauge, the personal consumption expenditures (PCE) price index declined 0.1% in November, the first decline in the PCE index since April 2020, the Commerce Department said on Dec 22.
The decline can be attributed to a 0.1% drop in food prices, while energy prices slid 2.7%. Year over year, PCE inflation increased 2.6% in November after jumping 2.9% in October. This was also the second straight month since March 2021 that the annual PCE price index came in below 3%.
Core PCE, which excludes the volatile food and energy prices, rose just 0.1% month over month in November. Year over year, the PCE price index rose 3.2% in November, the smallest jump since April 2021 after jumping 3.4% in October.
Although inflation has now fallen below the 3% mark, it is still above the Federal Reserve’s target of 2%. However, the Federal Reserve, which increased interest rates by 525 basis points since March 2022 to take its benchmark policy rate in the range of 5.25-5.50%, now believes that the policy rate likely has peaked.
The aggressive rate hikes have been bearing fruit, which also made the Federal Reserve leave its policy rates unchanged in its past three FOMC meetings.
Besides, it has signaled that interest rates will not be kept higher for a longer period. This has raised expectations of the Federal Reserve implementing rate cuts earlier than expected. Market participants now believe that the first of the rate cuts could be implemented in March, with two more rate cuts later in 2024.
Lower borrowing costs bode well for several industries and the broader economy. Growth stocks, especially the technology sector, tend to thrive the most in such an environment. It would thus be wise to consider investing in large-cap technology stocks that have a favorable Zacks Rank.
Our Choices
We have narrowed our search to five technology giants (market capital > $50 billion) that have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) or #2 (Buy).
Workday, Inc. WDAY is a provider of enterprise-level software solutions for financial management and human resource domains. WDAY’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Workday’s expected earnings growth rate for next year is 14.1%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days. WDAY currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Microsoft Corporation MSFT is one of the largest broad-based technology providers in the world. MSFT dominates the PC software market with more than 73% of the market share for desktop operating systems. Microsoft’s Microsoft 365 application suite is one of the most popular productivity software globally.
Microsoft’s expected earnings growth rate for next year is 14.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the past 60 days. MSFT presently carries a Zacks Rank #2.
Meta Platforms, Inc. META is the world’s largest social media platform. META’s portfolio offering evolved from a single Facebook app to multiple apps, such as the photo and video sharing app Instagram and the WhatsApp messaging app, owing to acquisitions. Along with in-house developed Messenger, these apps now form Meta’s family of products used by almost 3.96 billion people on a monthly basis as of Sep 30, 2023.
Meta Platforms’ expected earnings growth rate for next year is 22.7%. The Zacks Consensus Estimate for current-year earnings has improved 5.4% over the past 60 days. META presently carries a Zacks Rank #2.
NVIDIA Corporation NVDA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms. NVIDIA’s GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores necessary to run deep-learning algorithms.
NVIDIA’s expected earnings growth rate for next year is 61.5%. The Zacks Consensus Estimate for current-year earnings has improved 14.4% over the past 60 days. NVDA presently has a Zacks Rank #2.
Alphabet Inc. GOOGL is one of the most innovative companies in the modern technological age. Over the last few years, GOOGL has evolved from primarily being a search-engine provider to cloud computing, ad-based video and music streaming, autonomous vehicles, healthcare providers and others.
Alphabet’s expected earnings growth rate for next year is 15.5%. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the past 60 days. GOOGL presently carries a Zacks Rank #2.
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Workday, Inc. (WDAY) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
