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Markets Back to Breakeven Thanks to 5 Large Caps

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When we look back now, the nightmare of the first six weeks of the year seems unreal. It was the worst beginning to a year on record. The major indexes had entered correction territory and were eyeing a bear market. However, the Dow is now in the green for this year, while the S&P 500 is just a few points off, after moving up 0.9% and 0.7%, respectively, on Thursday.

Broad-based gains in energy and materials sectors helped the major indexes to move north yesterday. Rebound in oil prices from its 13-year low to end above $40 a barrel for the first time in three months boosted both the sectors. Crude prices gained after major oil producers planned a meeting to mitigate a global glut. Additionally, weakness in the U.S. dollar as the Fed lowered rate hike projections helped oil prices to move higher.

Moreover, gains among transportation stocks including FedEx Corporation FDX lifted the Dow. Surge in hiring, positive readings on manufacturing, consumer and housing fronts also added to the optimism. Banking on these encouraging trends, we have focused on five large-cap stocks that have propelled the markets higher.

Crude Gains, Dollar Sinks Post-Fed

U.S. crude gained 4.5% to finish at $40.20 on Thursday, the highest level since Dec 3. Oil prices soared on hopes about production cuts. A sharp slide in the U.S. dollar also had a positive impact on oil prices.

The rally in crude oil prices has been impressive lately, thanks to major oil producers' willingness to meet to discuss a supply freeze. On Apr 17, Qatar will host a meeting between OPEC and non-OPEC producers, a sign that producers may come up with solutions to bridge the demand-supply gap.

Meanwhile, the Federal Reserve has decided to keep interest rates on hold at the end of its two-day policy meeting this week. Weak global growth and volatility in the financial markets were cited to be the reasons behind Fed keeping rates unchanged. Additionally, Fed indicated that only two rate hikes were likely during the course of this year.

Fed's decision not to raise rates swiftly as decided earlier weakened the U.S. dollar sharply, which in turn lifted oil and other commodities. The ICE U.S. dollar index that measures the U.S. currency against a basket of six major currencies dropped 1.1% yesterday.

Transportation Enters Bull Market, Boosts Dow

Gains among transportation stocks helped the Dow to climb into positive territory on a year-to-date basis on Thursday. The Dow Jones Transportation Index jumped 2.98% on Thursday to close above its 200-day moving average for the first time since May 8, 2015. This indicated that the index officially entered a bull market. The index also surged more than 20% from its Jan 20 low.

Among transportation companies, shares of FedEx soared 11.8% after the company posted upbeat earnings results for its latest quarter. FedEx gained the most since 1993. FedEx's third-quarter fiscal 2016 earnings per share of $2.51 beat the Zacks Consensus Estimate of $2.33. A strong holiday season owing to the e-commerce boom drove the earnings beat. FedEx was also the best performing stock on the S&P 500.

Separately, major Dow components, General Electric Company GE , The Boeing Company BA and Caterpillar Inc. CAT led gains, up 2.6%, 2.5% and 2.1%, respectively.

5 Large-Cap Stocks That Lifted the Markets

U.S. stocks edged up on Thursday as FedEx boosted industrials, while the energy and materials sectors gained as crude prices held onto strong gains. In fact, oil prices bounced back from its record low in mid-February, which helped the Dow to break even yesterday and the S&P 500 to post its best ever start to the month of March since 2002.

Positive economic data continued to buoy investor sentiment. Jobs data in February painted a solid picture of the labor market, while the housing industry remained firmer than what most believed. Consumer spending levels too increased at the fastest pace in eight months this January. Not only did consumers buy big ticket items like cars and houses but they also ramped up purchases of a range of goods that include other discretionary products.

China's stimulus measures, on the other hand, raised hopes of a much stable global economy which would in turn contain the volatility in the broader markets. Let us now zero in on the five large-cap stocks that are the biggest winners on a year-to-date basis. And in the process, they've also helped the broader markets to climb higher.

Most of these companies are also part of the above mentioned booming sectors, while others have gained from the promising macro-economic trends. Companies having a market-cap of $10 billion plus are generally considered as large caps.

Freeport-McMoRan Inc.FCX acquires, explores and develops mineral assets, and oil and natural gas resources. FCX skyrocketed 61% on a year-to-date basis and currently has a Zacks Rank #3 (Hold).

Newmont Mining Corp.NEM operates in the mining industry. NEM primarily produces gold, silver and copper. NEM gained a whopping 52.6% on a year-to-date basis and currently has a Zacks Rank #3 (Hold).

Michael Kors Holdings Ltd.KORS designs and distributes apparels for both men and women. KORS is part of the consumer goods sector. KORS soared 41.8% on a year-to-date basis and currently boasts a Zacks Rank #2 (Buy).

Spectra Energy Corp.SE operates a portfolio of natural gas-related energy assets in North America. SE increased almost 29% on a year-to-date basis and currently has a Zacks Rank #3 (Hold).

Kinder Morgan, Inc.KMI operates as an energy infrastructure company in North America. KMI handles energy products including crude oil. KMI surged 26.3% on a year-to-date basis and currently has a Zacks Rank #3 (Hold).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SPECTRA ENERGY (SE): Free Stock Analysis Report

BOEING CO (BA): Free Stock Analysis Report

GENL ELECTRIC (GE): Free Stock Analysis Report

CATERPILLAR INC (CAT): Free Stock Analysis Report

NEWMONT MINING (NEM): Free Stock Analysis Report

FREEPT MC COP-B (FCX): Free Stock Analysis Report

KINDER MORGAN (KMI): Free Stock Analysis Report

FEDEX CORP (FDX): Free Stock Analysis Report

MICHAEL KORS (KORS): 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.


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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