U.S. equities surged again on Wednesday, continuing a two-week rebound that has put the Dow Jones Industrial Average within striking distance of the 18,000 level for the first time since late April.
Tuesday’s solid new homes sales report, a fresh bailout for Greece and a match of M&A activity have all played a role.
A hallmark of the move has been a rotation into areas of underperformance for the year to date.
Whether the move continues higher depends, in large part, on the tone of Federal Reserve chairman Janet Yellen’s speech on Friday. Should she reinforce recent hawkish chatter, talking up the odds of two, three or even four rate hikes this year, stocks could struggle. But if she maintains her dovish reputation, talking up downside risks and dismissing recent evidence of inflation stabilization, we could see an acceleration of upside gains.
If so, here are three stocks to keep an eye on.
Bank of America Corp (BAC)
Big banks stocks like Bank of America Corp (BAC) have struggled since last summer on fears over rising energy sector defaults and economic vulnerabilities. Better-than-expected first-quarter results back in April alleviated many of these concerns and boosted BAC towards its 200-day moving average. Some profit taking ensued, but shares are back at it again challenging a level it hasn’t been above since 2015 ended.
As long as energy prices keep rising, big bank stocks should keep rising. We’ll get another look at the company’s results on July 18 when it reports before the bell. Analysts are looking for earnings of 37 cents per share on revenues of $21 billion.
Micron Technology, Inc. (MU)
Semiconductor stocks like Micron Technology, Inc. (MU) have, as a group, broken to levels not seen since last summer — ending a long sideways crawl. Shares got a lift from a recent Mizuho research note that said the company will likely benefit from capital expenditure cuts by competitors.
The company will next report results on June 23 after the bell. Analysts are looking for a loss of nine cents per share on revenues of nearly $3 billion.
Marathon Oil Corporation (MRO)
Marathon Oil Corporation (MRO) shares are threatening to push up and over the 200-day average again after a failed attempt back in April. If successful, this would be the first sustained move above this technical threshold since late 2014.
Much of the recent stock market strength has been predicated on a near doubling of crude oil prices from their February 11 low.
With West Texas Intermediate Crude on the verge of breaking the $50-a-barrel threshold for the first time since October, stocks like MRO could be in for a nice surge as investor start believing the worst just may be behind the oil and gas industry.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
