The spread of the COVID-19 delta variant is on the rise across the globe, raising concerns among investors about its potential impact on global economic growth. Investors dumped stocks on Jul 19, dragging major U.S. indexes down. European bourses, in fact, experienced their worst trading session in 2021.
The Dow tanked more than 700 points and notched its worst day in nearly nine months. The broader S&P 500 shed 1.6%, while the tech-heavy Nasdaq registered its fifth successive losing session. Similarly, the Stoxx Europe 600 and the FTSE 100 dropped 2.3% at the close of yesterday’s trading session. While Stoxx Europe 600 notched its biggest one-day drop this year, the FTSE 100 slumped to a two-month low.
The trading patterns yesterday were almost similar to the one that prevailed during the outbreak of coronavirus last year. After all, investors sold shares of companies that can be impacted by a possible curb on businesses and movements. This is because many fear that the delta variant could lead to a fresh wave of shutdowns and hamper the economic recovery process.
The more contagious variant of coronavirus at present is burgeoning in many parts of the globe, including highly-vaccinated places like the UK. In the United States, the Delta variant started to spread in places where vaccination rates are relatively low.
Unfortunately, the gloomy news of the Delta variant comes at a time when the economy is already experiencing the fastest rate of inflation in years. The consumer price index (CPI) climbed 5.4% in June compared to the year-ago period, per the Labor Department, citing a MarketWatch article. The CPI had notched its highest 12-month uptick since August 2008 (read more: 4 Stocks to Beat the Biggest Surge in Inflation Since 2008).
What’s more, fears of stagflation are now doing the rounds among investors. After all, stagflation refers to an increase in inflation amid sluggish economic growth. But that doesn’t mean stock investors should lose heart. After all, retail investors, in general, have been fueling the stock market rally in recent times and are broadly unperturbed by the temporary selloff in the stock market due to the spread of the delta variant. In fact, they use these selloffs as buying opportunities and are quite confident that the market vis-à-vis the economy will chug along in the near term.
This is because the Fed believes that the bump in inflation is temporary and that it will stick to its accommodative monetary policy for the time being to pep up the economy. Moreover, the labor market is showing signs of strengthening and household savings have increased, things that bode well for the economy.
Thus, with the economy along with the stock market expected to continue gaining steam despite momentary blips, it would be wise for investors to consider equities. They should invest in companies which are fundamentally solid enough to regain strength after yesterday’s blow. By doing so, investors will be buying shares at a discounted price as well. Here, we have highlighted four such stocks that possess a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Best Buy Co., Inc. BBY is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, heath, security, appliances and related services. The Zacks Consensus Estimate for its current-year earnings has moved up 16.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 7.8%. Shares of Best Buy dipped 1.9% on Jul 19.
Abercrombie & Fitch Company ANF operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids. The Zacks Consensus Estimate for its current-year earnings has moved up 118.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 552.1%. Shares of Abercrombie & Fitch slipped 4.1% yesterday.
ConocoPhillips COP is primarily involved in the exploration and production of oil and natural gas. The Zacks Consensus Estimate for its current-year earnings has moved up 22.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 520.6%. Shares of ConocoPhillips declined 3.2% on Jul 19.
Boot Barn Holdings, Inc. BOOT operates specialty retail stores in the United States. The company’s specialty retail stores offer western and work-related footwear, apparel, and accessories for men, women, and kids. The Zacks Consensus Estimate for its current-year earnings has moved up 12.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 70.3%. Shares of Boot Barn Holdings dropped 1.9% yesterday.
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
ConocoPhillips (COP) : Free Stock Analysis Report
Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
Best Buy Co., Inc. (BBY) : Free Stock Analysis Report
Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research