Key Takeaways Powell hinted at a September rate cut, sparking a market rally and Dow record close.Inflation data came in lower than expected, boosting investor confidence.Disney, Netflix, Carnival, Boyd Gaming and Ralph Lauren show strong earnings growth.Wall Street has been on a rally over the past two months, as investors held their nerves and ignored concerns over the Federal Reserve’s plans with its monetary policy and the impact of tariffs on the economy.However, concerns over the next rate cut eased l ...

Market Overview - Wall Street is experiencing a rally, with the S&P 500 and Nasdaq reaching new all-time highs due to eased trade worries and geopolitical tensions [1][6] - The S&P 500 has gained nearly 20% from its April lows and is up 5% year to date, closing at 6,204.95 points [6] - The Nasdaq closed at 20,369.73, also marking a new all-time high [6] Consumer Sentiment - Consumer sentiment has rebounded for the first time in six months, with the Michigan Consumer Sentiment Index rising 16.3% to 60.7 in June from May's 52.2, marking the largest monthly increase in over 30 years [3][9] - This increase in consumer sentiment is attributed to positive developments, including a potential trade deal with China and easing geopolitical tensions in the Middle East [4][5] Federal Reserve Expectations - Market participants are anticipating at least two 25 basis point rate cuts from the Federal Reserve this year, with expectations for the first cut as early as July [7] Consumer Discretionary Stocks - Consumer discretionary stocks such as Interface, Inc. (TILE), Carnival Corporation & plc (CCL), Grand Canyon Education, Inc. (LOPE), and fuboTV Inc. (FUBO) are identified as having strong potential in 2025, each holding a Zacks Rank 2 (Buy) [2][9] - Interface, Inc. has an expected earnings growth rate of 8.2% for the current year, with a 2.6% improvement in earnings estimates over the past 60 days [8] - Carnival Corporation & plc is projected to have a 38% earnings growth rate for the current year, with a 5.8% improvement in earnings estimates over the last 60 days [10] - Grand Canyon Education, Inc. has an expected earnings growth rate of 8.8%, with a 1.3% improvement in earnings estimates over the past 60 days [12] - fuboTV Inc. is expected to see a 69% earnings growth rate for next year, with a 25% improvement in current-year earnings estimates over the past 60 days [13]

Industry Overview - Travel stocks have faced challenges at the start of 2025, but cruise stocks are showing positive momentum with a 6.4% year-over-year increase in cruise spending in March, compared to a 4.5% increase in February [1] - Overall travel spending saw a decline of 3.5%, while cruise spending surged by 15.6% from the previous month [1] - The Zacks Leisure and Recreation Services industry group ranks in the top 38% of approximately 250 Zacks Ranked Industries, indicating potential outperformance in the next 3 to 6 months [2] Royal Caribbean - Royal Caribbean Cruises (RCL) has reached all-time high stock prices and operates three global brands: Royal Caribbean International, Celebrity Cruises, and Azamara Club Cruises [4] - RCL reported adjusted earnings per share (EPS) of $2.71 for the first quarter, exceeding the Zacks Consensus Estimate of $2.53 by 7.1%, with revenues increasing 7.3% year-over-year to $4 billion [7] - The company has raised its full-year adjusted EPS guidance to a range of $14.55-$15.55, up from $14.35-$14.65 [9] - Analysts have increased their full-year earnings estimates for RCL by 3.98% in the past 60 days, projecting a 30.7% year-over-year increase in EPS for 2025 [10] Carnival - Carnival Corporation (CCL) operates a fleet of over 90 ships and is experiencing a positive trend in onboard revenues, which grew approximately 10% year-over-year in the first quarter of fiscal 2025 [12] - CCL's bottom line is projected to increase by 30.3% in fiscal 2025 to $1.85 per share, with revenues expected to rise by 4.1% to $26.1 billion [14] - CCL has exceeded earnings estimates in each of the past four quarters, with a trailing four-quarter average earnings surprise of 458.4% [14]

Economic Overview - Inflation unexpectedly declined in March for the first time in nearly five years, with the consumer price index (CPI) decreasing by 0.1% sequentially after a 0.2% increase in February, surpassing the consensus estimate of a 0.2% rise [3][4] - Year-over-year, CPI rose 2.4% in March, down from 2.8% in February, while core CPI increased by 0.1% sequentially, marking the smallest rise since June 2024 [4][7] - The decline in inflation was attributed to cheaper fuel and motor vehicles, with gasoline prices dropping by 6.3%, although food prices rose by 0.45% in March [4] Market Reaction - Following President Trump's announcement of a 90-day pause on tariffs, Wall Street experienced significant gains, with all three major indexes hitting record single-day increases [5][6] - The temporary halt in tariffs provided relief to investors after a previous loss of $6.4 trillion in four trading sessions due to the imposition of tariffs [6] Investment Opportunities - Given the positive market sentiment, investing in consumer discretionary stocks is recommended, with four highlighted stocks: American Outdoor Brands, Carnival Corporation, GameStop, and Netflix [2] - American Outdoor Brands (AOUT) has an expected earnings growth rate of 93.8% for the current year, with a Zacks Rank of 2 [9] - Carnival Corporation (CCL) is the largest cruise operator globally, with an expected earnings growth rate of 31% for the current year and a Zacks Rank of 2 [10] - GameStop (GME), the largest video game retailer, has an expected earnings growth rate of over 100% for next year, currently holding a Zacks Rank of 1 [12] - Netflix (NFLX), a pioneer in streaming, has an expected earnings growth rate of 24.1% for the current year, with a Zacks Rank of 2 [14]