Wall Street ended lower as stronger-than-expected jobs data diminished expectations for further interest rate cuts by the Federal Reserve. Last week, all three major indices — the Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average — decreased by 3.54%, 2.5% and 1.8%, respectively.
The Labor Department reported on Friday, January 11, 2025, that nonfarm payrolls in December soared by 256,00 against 212,00 in November and came above the Dow Jones forecast of 155,000 jobs. The unemployment rate also fell to 4.1% over the same period. The yield on the U.S. benchmark 10-year Treasury note hit a high of 4.79%, the highest level since November 2023. Market participants expect a single Fed rate cut no sooner than June due to stronger-than-expected labor market data.
The Institute of Supply Management reported that the manufacturing Purchasing Managers’ Index (PMI) contracted for the ninth consecutive month in December to 49.3. However, services PMI came in at 54.1 over the same period. It is important to note that any reading below 50 indicates a contraction of manufacturing activities.
Regardless of market conditions, we, here at Zacks, provide investors with unbiased guidance on how to beat the market.
As usual, Zacks Research guided investors over the past three months with its time-tested methodologies. Given the prevailing market uncertainty, you may want to look at our feats to prepare better for your next action.
Here are some of our key achievements:
Dutch Bros and AppLovin Following Zacks Rank Upgrade
Shares of Dutch Bros Inc. BROS have gained 63.74% (versus the S&P 500’s 1.8% decrease) since it was upgraded to a Zacks Rank #2 (Buy) on November 7.
Another stock, AppLovin Corporation APP, which was upgraded to a Zacks Rank #1 (Strong Buy) on November 8, has returned 29.2% (versus the S&P 500’s 2.5% decrease) since then.
Zacks Rank, our short-term rating system, has earnings estimate revisions at its core. Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
A hypothetical portfolio of Zacks Rank # 1 stocks returned +21.6% in the year-to-date period through November 4, 2024, vs. +28.3% for the S&P 500 index and +18.6% for the equal-weight version of the S&P 500 index.
This hypothetical portfolio returned +20.63% in 2023 vs. +24.83% for the S&P 500 index and +15% for the equal-weight S&P 500 index.
The portfolio of Zacks Rank #1 stocks is an equal-weight portfolio, while the S&P 500 index is a market-cap-weighted index that has been notably distorted by the concentrated performance of mega-cap stocks since late 2022.
The Zacks Model Portfolio — consisting of Zacks Rank #1 stocks — has outperformed the S&P index by almost 13 percentage points since 1988 (through November 4, 2024, the Zacks # 1 Rank stocks generated an annualized average return of +24.1% since 1988 vs. +11.2% for the S&P 500 index).
You can see the complete list of today’s Zacks Rank #1 stocks here >>>
Check Dutch Bros’ historical EPS and Sales here>>>
Check AppLovin’s historical EPS and Sales here>>>
Zacks Investment Research
Image Source: Zacks Investment Research
Zacks Recommendation Upgrades MasTec and Wolverine World Wide
Shares of MasTec, Inc. MTZ and Wolverine World Wide, Inc. WWW have advanced 9% (versus the S&P 500’s 1.9% increase) and 5.3% (versus the S&P 500’s 2.5% decrease) since their Zacks Recommendation was upgraded to November 5 and November 8, respectively.
While the Zacks Rank is our short-term rating system that is most effective over the one- to three-month holding horizon, the Zacks Recommendation aims to predict performance over the next 6 to 12 months. However, just like the Zacks Rank, the foundation for the Zacks Recommendation is trends in earnings estimate revisions.
The Zacks Recommendation classifies stocks into three groups — Outperform, Neutral and Underperform. While these recommendations are determined quantitatively, our analysts have the flexibility to override them for the 1100+ stocks they closely follow based on their better judgment of factors such as valuation, industry conditions and management effectiveness than the quantitative model.
To access our research reports with Zacks Recommendations for the 1100+ stocks we cover, click here>>>
Zacks Focus List Stocks Palantir Technologies, Axon Enterprise Shoot Up
Shares of Palantir Technologies Inc. PLTR, which belongs to the Zacks Focus List, have gained 54.6% over the past 12 weeks. The stock was added to the Focus List on March 26, 2024. Another Focus-List holding, Axon Enterprise, Inc. AXON, which was added to the portfolio on June 3, 2020, has returned 31% over the past 12 weeks. The S&P 500 has advanced 0.2% over this period.
The Focus List portfolio returned +26.86% in 2024 (through November 30) vs. +28.09% for the S&P 500 index and +20.56% for the equal-weight S&P 500 index.
The 50-stock Zacks Focus List model portfolio returned +31.44% in 2023 vs. +26.28% for the S&P 500 index and +13.61% for the equal-weight S&P 500 index. In 2022, the portfolio produced -15.2% vs. the S&P 500 index’s -17.96%.
Since 2004, the Focus List portfolio has produced an annualized return of +12.11% (through November 30, 2024). This compares to a +10.55% annualized return for the S&P 500 index and +10.41% for the equal-weight version of the index in the same time period.
Unlock all of our powerful research, tools and analysis, including the Focus List, Zacks #1 Rank List, Equity Research Reports, Zacks Earnings ESP Filter, Premium Screener and more, as part of Zacks Premium. Gain full access now >>
Zacks ECAP Stocks Walmart & Costco Wholesale Make Significant Gains
Walmart Inc. WMT, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 16.1% over the past 12 weeks. Costco Wholesale Corporation COST has followed Walmart with 5.4% returns.
The Zacks ECAP, which consists of 30 concentrated, ultra-defensive, long-term Buy-and-Hold stocks, returned +5.62% in November 2024 vs. the S&P 500 index’s +5.87% return (IVV ETF).
For the year-to-date period (through the end of November 2024), the portfolio returned +24.07% vs. +28.1% for the S&P 500 index.
In 2023, the portfolio returned +12.17% vs. +26.28% for the S&P 500 index. The portfolio returned -4.7% in 2022 vs. the S&P 500 index’s -17.96%.
With little to no turnover and annual rebalance periodicity, ECAP seeks to minimize capital loss by holding shares of companies whose earnings streams exhibit a proven 20+ year track record of surviving recessionary periods with minimal impact on aggregate earnings growth relative to the overall S&P 500.
The ECAP and many other model portfolios are available as part of Zacks Advisor Tools, a cloud-based solution to access Zacks award-winning stock, mutual fund and ETF research. Click here to schedule a demo.
Zacks ECDP Stocks Paychex and Clorox Outperform Peers
Paychex, Inc. PAYX, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 0.1% over the past 12 weeks. Another ECDP stock, The Clorox Company CLX, has declined 1.7% over the same time frame. Of course, the inclination of investors toward quality dividend stocks to secure an income stream amid heightened market volatility contributed to this performance.
Check Paychex's dividend history here>>>
Check Clorox’s dividend history here>>>
With an extremely low beta and a history of minimum earnings variability over the last 20+ years, this 25-stock portfolio helps significantly mitigate risk.
The Zacks Earnings Certain Dividend Portfolio (ECDP) returned +3.06% in November 2024 vs. the S&P 500 index’s +5.87% gain and the Dividend Aristocrats ETF’s (NOBL) +4.85%.
For the year-to-date period (through November 30), the portfolio returned +15.55% vs. +28.1% for the S&P 500 index and +15.61% for NOBL.
The portfolio returned -0.9% in 2023 vs. +26.28% for the S&P 500 index and +8.11% for NOBL. The portfolio returned -2.3% in 2022 vs. -17.96% for the S&P 500 index and -8.34% for NOBL.
Click here to access this portfolio on Zacks Advisor Tools.
Zacks Top 10 Stocks Credo Technology Delivers Solid Returns
Credo Technology Group Holding Ltd CRDO, from the Zacks Top 10 Stocks for 2025, has jumped 9.8% year to date, compared with the S&P 500 index’s 0.9% decrease.
The Top 10 portfolio returned +71.88% this year through November 30, vs. +28.09% for the S&P 500 index and +20.56% for the equal-weight version of the index.
The Top 10 portfolio returned +25.15% in 2023 vs. +26.28% for the S&P 500 index.
Since 2012, the Top 10 portfolio has produced a cumulative return of +2,112.57% through November 30, 2024, vs. +475.56% for the S&P 500 index. The portfolio has produced an average return of +26.6% in the period 2012 through November 30, 2024, vs. +12.83% for the S&P 500 index and +10.93% for the equal-weight version of the index.
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
