While impressive third-quarter corporate earnings reports and declining jobless claims have been pushing the stock market higher, the continuing spread of the COVID-19 Delta variant, supply chain issues, and rising inflation are raising concerns about a potential market correction in the near term. Against this backdrop, we think buying and holding fundamentally-sound mega-cap stocks Alphabet (NASDAQ:GOOGL), Pfizer Inc. (NYSE:PFE), Abbott Laboratories (NYSE:ABT), and Accenture plc (NYSE:ACN) could help dodge short-term market fluctuations and generate solid long-term returns. Let’s discuss.Solid third-quarter earnings reported by mega-cap companies have driven the major benchmark indexes to fresh highs lately. The Dow Jones rose for the third straight day to hit a new high on October 26. Also that day, the S&P 500 hit a fresh high. Roughly 38% of the S&P 500 members have so far reported third-quarter earnings. Of these companies, 83% have surpassed consensus EPS estimates, while 79% have beaten revenue estimates.
While the robust earnings reports and declining jobless claims are driving the markets higher, factors including surging COVID-19 cases, intensifying supply chain issues, and increasing inflation could soon precipitate a market correction. As such, we think it could be wise to follow a buy-and-hold strategy now.
With a wide market reach, expanding customer base, and impressive day-to-date developments, mega-cap stocks—which possess a market capitalization of more than $200 billion—have the potential to dodge the short-term fluctuations and deliver substantial returns in the long run. As dominant players in their respective industries, and possessing sound fundamentals, Alphabet Inc. (GOOGL), Pfizer Inc. (PFE), Abbott Laboratories (ABT), and Accenture plc (ACN) could be wise bets now.