5 ETFs And Stocks To Buy On The Dip

Wall Street has been on a tumultuous ride this quarter as higher interest rates, political malaise in Europe, U.S.–China trade woes and threats of a global slowdown have led to market gyrations. A flattening U.S. yield curve and decline in oil price have added to the woes.

However, the Fed’s dovish view, an accelerating economy, fresh cuts in oil supply by OPEC and its allies, and holiday optimism are expected to drive stocks higher.

Powell recently said that interest rates were "just below" the level that would be neutral for the economy — meaning they will neither speed up nor slow down economic growth. Additionally, the subsequent minutes from the central bank's latest meeting suggest that the Fed will likely raise rates this month but may stall rate hikes next year. Additionally, the U.S. economy has been on a solid growth track with robust job creation, strong GDP growth, a 50-year low unemployment rate, solid wage gains, and rising consumer and business confidence.

National Retail Federation (NRF) expects holiday sales — excluding automobiles, gasoline, and restaurants — to grow 4.3-4.8% for November and December to $717.45-$720.89 billion. This is higher than the five-year average of 3.9% but lower than last year’s growth of 5.3%. Notably, Adobe expects e-commerce sales to rise 14.8% this holiday season to $124.1 billion.

If these weren’t enough, reports on progress in U.S.-China trade relation boosted investors’ optimism. This is especially true as Beijing indicated that it will ease its "Made in China 2025" industrial policy while Trump said that talks were already underway and that China was buying a "tremendous amount" of U.S. soybeans.

Given the bullish fundamentals, the dips might charge up investors to snap up stocks and ETFs on the cheap for outsized gains heading into Christmas.

How to Find Bargain ETFs?

Using our database first we have selected ETFs with a Zacks Rank #1 (Strong Buy) or 2 (Buy). This is because these ranks suggest strengthening fundamentals and superior weighting methodologies that could allow them to lead higher than their cousins in a booming market. Then, we narrowed down the list to funds having a lower P/E ratio than 18.28 for the broad market fund (SPY - Free Report).

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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