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After a weak start to 2025, Wall Street regained momentum, driven by solid corporate earnings and advancements in AI. The S&P 500 touched record highs on several occasions, having risen 2.2%, while the Dow Jones and the Nasdaq Composite Index have gained 2.1% and 1.1%, respectively, since the start of the year. The gains came despite concerns over slowdown and trade war fears.
As such, we have highlighted five stocks from different sectors that more than doubled halfway through the first quarter and have a Zacks Rank #1 (Strong Buy) or #2 (Buy). These are INVIVYD INC. IVVD, 21Vianet Group, Inc. VNET, FuboTV FUBO, Noodles & Company NDLS and Digital Turbine Inc. APPS. You can see the complete list of today’s Zacks #1 Rank stocks here.
Driving Factors
Total fourth-quarter earnings of the 429 S&P 500 members who have reported results so far increased 12.1% from the prior-year period on 5.5% higher revenues. Of the companies that reported results, 77.9% beat EPS estimates and 66.2% surpassed revenue estimates. This is notably a better performance relative to other recent periods, particularly in terms of the growth pace.
Companies are allocating substantial capital toward AI, anticipating long-term benefits that justify current valuations. Significant investments in AI and related technologies have spurred optimism about future productivity gains and economic expansion.
Growth Concerns Resurface
The latest economic data points to a slowdown in the economy. U.S. business activity stalled in February, while consumer sentiment dropped to a 15-month low. Consumers' 12-month inflation expectations deteriorated to 4.3%, the highest reading since November 2023, from 3.3% in January. Over the next five years, consumers expect inflation to be 3.5%, the highest since 1995, compared with 3.2% in January, according to the latest survey. .
Additionally, concerns are building up in the homebuilder space that tariffs would raise the cost of building materials, including lumber and appliances, thereby leading to elevated home prices and reduced affordability. Homebuilder sentiment dropped to a five-month low in February.
Trade Worries Lingers
President Donald Trump's tariff talks, which could lead to a global trade war, have been weighing on the stock market. Trump’s 25% tariff on goods from Mexico and Canada, which was delayed by a month, is set to take effect next month. Early this month, Trump announced global 25% tariffs on steel and aluminum imports, which is expected to take effect on March 12. He also signed plans for reciprocal tariffs but delayed their implementation until April to allow his administration to negotiate on a one-by-one basis with countries that could be impacted.
Another tariff threat came last week when Donald Trump threatened to impose 25% tariffs on automobile, semiconductor and pharmaceutical imports as soon as April.