4 Blue-Chip Stocks in Focus as Dow Hits New Milestone

Wall Street has resumed its rally this month after a brief pause in April as investors appear to be confident after a spate of favorable economic data, raising optimism about a rate cut soon. All the three major indexes hit a fresh all-time high last week, with the Dow leading from the front.

Dow Hits 40,000

The Dow gained 0.3% on Friday to close at 40,003.59, clinching a fresh record high. The index crossed 40,000 for the first time on May 16. The Dow has been on a rally since the beginning of the year.

The Dow has registered 19 record closing highs in 2024. Year to date, the blue-chip index has gained 7.9% and has now ended in the green for five consecutive weeks.

Positive economic data has been responsible for the Dow’s recent rally. The Labor Department reported earlier this month that inflation eased in April after increasing in the first three months of the year.

The consumer price index (CPI) rose 0.3% month over month in April, lower than the consensus estimate of a rise of 0.4%. On a year-over-year basis, CPI rose 3.4%, in line with analysts’ expectations.

Core CPI, which excludes the volatile food and energy prices, also rose 0.3% sequentially in April after increasing 0.4% in the first three months of the year. Year over year, CPI rose 3.6% in April, the lowest monthly increase since April 2021.

Besides, job additions to the economy slowed in April, indicating that the labor market is finally cooling. Also, U.S. GDP grew a meager 1.6% in the first quarter after rising 3.4% in the final quarter of 2023, suggesting a slowdown.

A slowdown in the manufacturing and services sector PMI in April further suggested a slowing economy, fueling the rally.

Rate Cut Hopes Arise Again

Investors are again optimistic that the Federal Reserve will soon start its planned rate cuts. Last month, the central bank said that it’s unlikely that there will be another interest rate hike.

Moreover, the Fed still plans three 25-basis-point rate cuts by the end of 2024. Markets are now pricing in a 73.2% chance that the Fed will cut the benchmark lending rate by 25 basis points in September, according to the CME FedWatch tool.

Stocks in Focus

Given the positive sentiment and bright outlook, investors should bet on these four fundamentally strong blue-chip stocks, namely The Goldman Sachs Group GS, Amazon.com, Inc. AMZN, American Express Company AXP and Microsoft Corporation MSFT. These companies are strategically positioned to take advantage of the overall upward trend in the market. These stocks have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and assure good returns. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Goldman Sachs Group is a leading global financial holding company providing IB, securities, investment management and consumer banking services to a diversified client base. GS is headquartered in New York, with offices in major financial centers globally.

The Goldman Sachs Group has an expected earnings growth rate of 60.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 12% over the last 60 days. GS presently sports a Zacks Rank #1.

Amazon.com, Inc. is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. AMZN’s online retail business revolves around the Prime program well-supported by the company’s massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish a footprint in the physical grocery supermarket space. AMZN also enjoys a dominant position in the cloud-computing market, particularly in the Infrastructure as a Service space, thanks to Amazon Web Services.

Amazon.com has an expected earnings growth rate of 56.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.8% over the last 60 days. AMZN currently carries a Zacks Rank #3.

American Express Company is a diversified financial services company, offering charge and credit payment card products, and travel-related services worldwide. AXP’s range of products and services include charge card, credit card and other payment and financing products; merchant acquisition and processing, servicing and settlement, and point-of-sale marketing and information products and services for merchants; network services; other fee services, including fraud prevention services and the design and operation of customer loyalty programs; expense management products and services, and travel-related services.

American Express has an expected earnings growth rate of 15% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. AXP presently has a Zacks Rank #3.

Microsoft Corporation 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 Corporation’s Microsoft 365 application suite is one of the most popular productivity software globally. MSFT is also one of the prominent public cloud providers that can deliver a wide variety of infrastructure-as-a-service and platform-as-a-service solutions at scale.

Microsoft Corporation has an expected earnings growth rate of 20% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 60 days. MSFT currently carries a Zacks Rank #3.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

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American Express Company (AXP) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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