Benign Inflation Data To Bolster Market Rally: 5 Top Picks

Decline in Government Bond Yields and Dollar Index

Following the release of February CPI data, yields on U.S. government bonds have declined. The yield on benchmark 10-year Treasury Note dropped to 2.639% from 2.641% on Mar 11. Likewise, yields on long-term 30-Year US Treasury Note decreased to 3.031% from 3.032%. Yields on short-term 2-Year Treasury Note slipped to 2.471% from 2.477%. Record-high government bond yields were largely blamed for the fourth quarter’s stock market turmoil.

Lower than inflation data also had an impact on the dollar index. On Mar 12, the ICE U.S. Dollar Index (DXY), which measures the greenback’s strength against a basket of six major currencies, decreased 0.3% to 96.913. On Mar 7, the DXY touched its three-month high at 97.70. Lower dollar price will make U.S. exports more competitive in the international markets.

Our Top Picks

The U.S. economy is likely to maintain its long-term growth albite at a slow pace. At this stage, investment in stocks with strong growth potential will be lucrative. Our selection is backed by a Growth Score of A and a Zacks Rank #1 (Strong Buy). 

The chart below shows the price performance of our five picks year to date.

SS&C Technologies Holdings Inc. (SSNC - Free Report) provides software products and software-enabled services to financial services and healthcare industries in the United States, Canada, Mexico, Europe, the Asia Pacific, and Japan. The company has an expected earnings growth rate of 30.5% for the current year. The Zacks Consensus Estimate for the current year has improved 7.3% over the last 60 days.

TESSCO Technologies Inc. (TESS - Free Report) is a leading provider of the services, products, and solutions required to build, operate, maintain and use wireless voice, data, messaging, location tracking and Internet systems. The company has an expected earnings growth rate of 38.2% for the current year. The Zacks Consensus Estimate for the current year has improved 22.6% over the last 60 days.

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