According to the Stock Trader’s Almanac, stocks normally offer solid returns on the Wednesday before Thanksgiving and the Friday after combined, albeit at a low volume. Although the trend has dwindled lately, one may be interested in knowing if there are any hot stocks and ETFs that can be tapped this Thanksgiving.

This makes us analyze: Will the U.S. stock market continue the age-old winning trend this year, too, or not? Let’s find out.

Markets Hovering Close to All-Time High

Wall Street has hit several new highs this year, with the S&P 500 up about 25% in 2024. The S&P 500 hit an all-time high of 6,017.31 on Nov. 11, 2024. The Trump bump, hopes for low rates and deregulation, Fed optimism and the AI rally have made this ascent possible. The Dow Jones and small caps hit new all-time highs on Nov. 25, 2024.

The forward rally from here depends largely on the news coming out on the U.S.-China trade front in Trump 2.0. The USMCA deal between the U.S., Mexico, and Canada is also under pressure. Hence, a potential inflation rebound may leave a dent on the U.S. economic growth momentum. However, just before Thanksgiving, the mood is moderately upbeat around U.S. stocks.

Energy Market on Upbeat Mode

Signs of escalation of the Russia-Ukraine war kept investors cautious of supply disruptions,causing a rally in oil ETFs like USO in the past week (as of Nov. 22, 2024). The partial restart of production in Norway's Johan Sverdrup oilfield limited gains.

Note that, for the first time, Ukraine used U.S. ATACMS missiles to strike Russian territory onNov. 19, 2024.Russian foreign minister Sergei Lavrov termed the attack as a Western escalation. Russian President Vladimir Putin lowered the threshold for a possible nuclear strike.

There are also signs of higher crude oil purchases by top importer China.China's crude imports are on track to end November at or close to all-time highs, StoneX energy analyst Alex Hodes said, referencing data from vessel tracker Kpler, as quoted on Reuters.

If this is not enough, President-elect Trump favors fossil fuel production. On the technology front, the relentless and huge demand for energy for feeding the data center in order to support the AI boom also have power to push up energy prices. United States Oil Fund LP USO gained 4.7% last week and 1.6% past month.

AI Boom in Fine Fettle

We expect the AI boom to remain strong in the next few quarters. Investors are closely watching NVIDIA’s Blackwell ramp. The next-generation AI chip, Blackwell, has demand from companies like OpenAI and others building AI data centers. NVIDIA plans to address concerns about delays in Blackwell chip shipments.

Agreed, NVIDIA failed to impress investors this earnings season with its less lofty guidance. Investors should also note that while AI innovations will continue, they tend to be incremental and moderate rather than groundbreaking. Hence, slowing sales momentum is natural in a maturing industry (read: Forget Guidance Woes: Buy Semiconductor ETFs on NVDA's Dip).

ETF & Stock Picks

Against this backdrop, we bet big on a year-end rally. Investors are likely to see a solid bounce in equities this Thanksgiving and after.

ETF Bets

ETF picks are all top-ranked.

SPDR Dow Jones Industrial Average ETF DIA – Zacks Rank #1 (Strong Buy)

Dow Jones trade is normally beneficial during the Trump presidency as it has more value focus than the S&P 500 and the Nasdaq. The Dow closed at a fresh new high to start the Thanksgiving week.

First Trust RBA American Industrial Renaissance ETF AIRR – Zacks Rank #2 (Buy)

Trump’s administration is expected to revamp its “America First” approach, offering new or enhanced tax breaks and subsidies to boost domestic manufacturing. Industrial stocks and ETFs should get a boost out of this policy.

iShares Russell Mid-Cap Value ETF IWS – Zacks Rank #2

Smaller and mid-cap ETFs tend to do well from the Trump bump. Mid-cap ETFs offer the best of both worlds — large and small caps. A value focus on this ETF should also be beneficial due to talks of Trump tariffs and the resultant geopolitical concerns. 

Vanguard Financials ETF VFH – Zacks Rank #1

Banks are well-positioned to benefit from Trump’s deregulation and lower corporate tax policies. The reduced regulations should lower compliance costs and increase profit margins for financial institutions and banks.

Stock Bets

Stock picks are top ranked, with a Value and Growth Score of A each and P/E of less than 20 times.

Willdan Group WLDN – P/E 18.96x, Rank #2

Willdan Group is a provider of professional technical and consulting services to utilities, private industry, and public agencies at all levels of government.

Carnival CCL – P/E 18.75x, Rank #1

Carnival operates as a cruise and vacation company. As a single economic entity, Carnival Corporation & Carnival plc forms the largest cruise operator in the world.

Cencora Inc. COR – P/E 16.44x, Rank #2

Cencora is one of the world’s largest pharmaceutical services companies focused on providing drug distribution and related services to reduce health care costs and improve patient outcomes.

Abercrombie & Fitch ANF – P/E 14.69x, Rank #2

Abercrombie & Fitch Co. operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids through a network of approximately 757 stores across North America, Europe, Asia and the Middle East, as well as the e-commerce sites.

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Carnival Corporation (CCL) : Free Stock Analysis Report

Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

Cencora, Inc. (COR) : Free Stock Analysis Report

Willdan Group, Inc. (WLDN) : Free Stock Analysis Report

SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports

United States Oil ETF (USO): ETF Research Reports

First Trust RBA American Industrial Renaissance ETF (AIRR): ETF Research Reports

Vanguard Financials ETF (VFH): ETF Research Reports

iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports

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