The market avoided another late-session selloff and posted solid gains for Tuesday… and it didn’t even need tech to lead the way!
The major indices actually rose throughout the day and finished around their highs, which was the complete opposite of Monday.
The Dow soared by 2.13% (or nearly 557 points) to 26,642.59. The index had a gain very similar to this yesterday before the selloff ruined it. But there was no third act craziness today.
It now has a three-day winning streak since it was the only index to finish slightly higher on Monday.
The S&P more than made up for the selloff as it jumped 1.34% to 3197.52 after sliding 0.94% the day before.
The NASDAQ finished higher as well, though underperformed its counterparts again as tech remains out of favor for the moment. The index rose 0.94% (or about 98 points) to 10,488.58.
That’s a great result, though it recovered less than half of yesterday’s 2.13% plunge. It feels all the more unfulfilling since it’s the mighty NASDAQ, which has been leading this market higher for weeks now despite rising coronavirus cases and delays in reopenings.
Earnings season unofficially began today with some reports from the big banks. As usual, JPMorgan (JPM) got most of the attention as the country’s biggest bank. It beat expectations on the top and bottom lines due, in part, to an increase in trading revenues.
However, JPM shares only improved 0.57%. Other banks that reported today included Citigroup (C, -3.93%) and Wells Fargo (WFC, -4.57%).
The reports were pretty good for the most part despite the market’s reactions, but clearly showed just how ugly the second-quarter was amid this pandemic shutdown.
Other financial names scheduled for the coming days include Goldman Sachs (GS) tomorrow and Bank of America (BAC) on Thursday.
We’ll also be getting our first FAANG report on Thursday, as Netflix (NFLX) is scheduled to come to the plate.
Today’s Portfolio Highlights:
Income Investor: Good tech stocks with stable dividend yields aren’t exactly easy to find, but Maddy located one on Tuesday by adding Garmin (GRMN). The high-tech recreational device maker came to prominence with navigation systems for cars, but has since diversified its line-up to include products for boats, airplanes, personal fitness and much more. Shares are up more than 50% since the coronavirus low on March 23 and the editor is confident that its annual yield of 2.5% is secure. Earnings and sales are on the rise and should continue moving upwards as people head outdoors to breakup the monotony during this pandemic shutdown. Read the full write-up for a lot more on today’s addition.
Stocks Under $10: The portfolio has a few open positions to fill and Brian got to work on Tuesday with the addition of toymaker Funko (FNKO). If you have a good memory, you may remember that the service pulled a 130% return out of this name back in 2018… and now the stock is much lower than the last time it was added. FNKO is a Zacks Rank #2 (Buy) that has beaten the Zacks Consensus Estimate in each of the last four quarters with an average surprise of 47%. Earnings estimates are moving higher for this year and next, and the editor thinks its valuation is “reasonable”. In addition to all this, Brian likes FNKO because its less volatile than tech/biotech names, so it adds stabilization to the portfolio. Read the full write-up for more about this new pick.
Surprise Trader: This earnings season will be all about the new “stay-home economy” in this portfolio. Dave considers networking hardware to be part of that space, so he added NETGEAR (NTGR) on Tuesday with a 12.5% allocation. The company beat the Zacks Consensus Estimate in 13 of the past 14 quarters, including the last five in a row. It topped by more than 16% last time, and has a positive Earnings ESP of 6.67% for the quarter coming after the bell on Wednesday, July 22. Shares of NTGR jumped 40% from the low in mid-March, but still has plenty of room to run before its all-time highs above $75. Read the full write-up for more on this new addition.
Marijuana Innovators: Things are looking up for the Canadian producers, which puts Aphria (APHA) in a good position. This medical cannabis company offers sativa, indica and hybrid medical marijuana products, as well as cannabis oils. Dave added APHA on Tuesday. Make sure to read his complete commentary for all the specifics on this new addition.
Zacks Short List: The portfolio swapped out two names in this week’s adjustment. The stocks that were short-covered included The TJX Cos. (TJX, +2.7%) and Xylem (XYL), while the new additions were Sunrun (RUN) and Tiffany (TIF). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Insider Trader: “Stocks rebounded today after the big bank earnings reports were better than expected.
“This is what is going to happen all earnings season. Everyone knows Q2 was awful. But if a company’s numbers are better than the grim outlook, then, see, it’s not that bad.” — Tracey Ryniec
All the Best,
Jim Giaquinto
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