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Wall Street has resumed its rally and recovered all the losses suffered earlier last week on fears that the economy was slipping into a recession. The rally gathered further pace this week after fresh data showed that inflation continued to decline, reinforcing bets that the Federal Reserve would start its rate cuts in September.
Inflation Continues to Decline
The Bureau of Labor Statistics reported on Aug 14 that the consumer price index (CPI) increased a marginal 0.2% month over month in July, which came in line with analysts’ expectations.
On a year-over-year basis, CPI increased 2.9%, lower than the consensus estimate of a rise of 3% and the lowest since March 2021. Core CPI, which excludes the volatile food and energy prices, also rose 0.2% month over month in July.
The CPI report came a day after softer-than-expected producer price index (PPI) data gave a boost to the Wall Street rally. PPI, a measure of the selling prices that producers get for goods and services, rose 0.1% sequentially in July, lower than the consensus estimate of a rise of 0.2%.
Core PPI, which excludes the volatile food and energy prices, remained unchanged in July. Year over year, PPI rose 2.2%, a sharp decline from the 2.7% jump in June.
The softer-than-expected CPI and PPI data have alleviated fears of an imminent recession that rattled markets earlier last week. Wednesday’s report reassured investors betting that the Federal Reserve with start cutting rates in September.
Markets are currently pricing in a 55% probability of a 50-basis point rate cut in September, according to the Fed's CME FedWatch Tool.
Lower rate cuts bode well for growth stocks like tech and consumer discretionary and the broader economy.
Our Choices
Given this scenario, we have narrowed our search to four consumer discretionary stocks such as DoubleDown Interactive Co., Ltd. DDI, Acme United Corporation ACU, Traeger, Inc. COOK and Cinemark Holdings, Inc. CNK that have strong potential for 2024.
These stocks have seen positive earnings estimate revisions in the last 60 days. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DoubleDown Interactive Co., Ltd. is a developer and publisher of digital social casino games. DDI is based in Seattle.
DoubleDown Interactive’s expected earnings growth rate for the current year is 15.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.5% over the past 60 days. DDI presently sports a Zacks Rank #1.