5 Top-Ranked Momentum Stocks To Override Volatility In March

Wall Street is reeling under volatility, which crept up in the second half of last month. However, despite facing severe market fluctuations, all the three major stock indexes — the Dow, the S&P 500, and the Nasdaq Composite — ended in green in February. Moreover, year to date, these indexes are in positive territory after finishing an impressive 2020 defying coronavirus.

Markets may witness fluctuations in the near future. The fear gauge — CBOE VIX — has refused to stay below 20 since Feb 12. Nevertheless, stock markets will remain northbound as the economy will gradually reopen supported by COVID-19 vaccinations. Additionally, the fundamentals of the U.S. economy remain strong as evident by several recently released data.  

Momentum Likely to Continue

Momentum investing calls for a continued appraisal of stocks, ensuring that an investor does not pick a beaten-down name or overlook a thriving one. Momentum investors buy high on the anticipation that a stock will only ascend in the short to intermediate-term.

In December 2020, the U.S. Congress had approved $900 billion of stimulus including one-time cash payments of $600 and a special weekly unemployment benefit of $300. Consequently, personal income climbed 10%, marking the second-highest monthly increase on record. Personal expenditure rose 2.4% — the first gain in three months and the biggest monthly increase since June 2020. Additionally, the savings rate jumped 20.5% in January from 13.4% in the previous month.

Goldman Sachs reported that the total savings of U.S. citizens could climb to $2.4 trillion by mid-2021. On Feb 27, the House of Representatives passed President Joe Biden's proposed $1.9 trillion fresh coronavirus-aid packages. If Senate passes this bill, massive savings along with further stimulus will significantly boost the pent-up demand for U.S. consumers.

A section of economists are skeptical that robust pent-up demand and shortage of inputs due to COIVD-19 related restrictions will result in both demand-pull and cost-push inflation, raising the general price level.

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