On Sep 12, U.S. stocks closed just short of record levels. The immediate catalysts for the day’s gains were encouraging developments on the U.S.-China trade war front. Additionally, the ECB announced it would be making substantial bond purchases shortly. This helped the Dow post a seven-day long stretch of gains. Similarly, the S&P 500 sealed its third straight daily win.
The upward march of indices this week may be attributed to a confluence of events, which occurred between the close of trading on Wednesday and the recommencement of market business on Thursday.
These events include Trump’s call to delay fresh tariffs on China, a rate cut by the ECB and its announcement of a bond purchase program, and the release of sluggish inflation data, clearing the way for a rate cut next week. This is why it is a great time to invest in S&P 500 stocks, which have gained strongly this year.
Trump Delays Additional China Tariffs
On Sep 11, stock futures increased after Trump tweeted that he would be delaying the proposed hike of tariffs on Chinese goods worth $250 billion. Higher tariffs would only come into effect from Oct 15, instead of Oct 1. Trump described this as a “gesture of good will” to China.
According to Treasury Secretary Steven Mnuchin, “The president delayed it because of a request from the vice premier.” Mnuchin added that China’s Vice Premier Liu He had made such a request since Oct 1 marks the 70th anniversary of the establishment of the People’s Republic of China.
ECB Takes Softer Monetary Stance, Inflation Dips
Then, on Sep 16, the ECB revealed that it was reducing deposit rates to -0.5%, effectively a reduction of 10 basis points. It also announced the launch of a large bond purchase program amounting to 20 billion euros per month. These measures are all part of a fresh quantitative easing initiative.
Finally, just before markets commenced trading, the Department of Labor released fresh CPI data. The figure for last month showed that CPI had only inched up marginally in August. Core CPI, did, however, post a yearly increase of 2.4%, its highest since 2008.
But the tame nature of inflation is likely to clear the way for a Fed rate next week. This will likely also help stocks to set new records.
A trifecta of events is pushing the Dow and S&P 500 to fresh records this week. Stocks are likely to surge even higher once the Fed announces another rate cut next week.
This is why it makes for a smart choice to invest in S&P 500 stocks, which have made strong gains year to date. We have narrowed down our search based on a Zacks Rank #1 (Strong Buy) and other relevant metrics. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arconic Inc. ARNC is a global leader in multi-material, precision engineered products and solutions for a variety of industries.
Arconic’s projected growth for the current year is 50%. Its earnings estimate for the current year has improved by 53.5% over the last 30 days. The stock has gained 60.2% year to date.
Keysight Technologies Inc. KEYS is a provider of electronic design and test instrumentation systems.
Keysight Technologies’ projected growth for the current year is 38.9%. Its earnings estimate for the current year has improved by 6.4% over the last 30 days. The stock has gained 59.5% year to date.
Transdigm Group Incorporated TDG is a leading global designer, producer and supplier of highly engineered aerospace components that are used in commercial and military aircraft.
Transdigm Group’s projected growth for the current year is 1.9%. Its earnings estimate for the current year has improved by 2% over the last 60 days. The stock has gained 51.3% year to date.
Fiserv, Inc. FISV provides financial services technology solutions to over 12,000 clients worldwide in the banking, insurance, healthcare and investment industries.
Fiserv’s projected growth for the current year is 29.8%. Its earnings estimate for the current year has improved by 6.2% over the last 60 days. The stock has gained 41.4% year to date.