Two of the major indices jumped by more than 1% on Wednesday with tech moving higher again and the Fed being wonderfully predictable in this month’s meeting.
The NASDAQ has been all over the place this week. It led the market higher on Monday, lagged behind its counterparts on Tuesday, and was back in the lead today.
The index rose 1.35% (or about 140 points) to 10,542.94. Investors have been getting increasingly concerned in recent weeks about tech running too hot, but they just can’t stay away for long.
Several FAANG CEOs were testifying in Washington about alleged anti-competitive practices today, but it didn’t make a dent in their performances.
Except for Netflix (NFLX, -0.82%), those companies all jumped more than 1% today. Apple (AAPL) was out front with a 1.92% advance.
The S&P rose 1.24% to 3258.44. The Dow couldn’t get over 1%, but still advanced 0.61% (or around 160 points) to 26,539.57.
We’re just a day away now from what will likely be the main event of this busy week of earnings season. Apple, Facebook (FB), Amazon (AMZN) and Alphabet (GOOG) all report on Thursday, though it will be after the bell.
One of the big tech stories today was chipmaker Advanced Micro Devices (AMD), which soared over 12.5% after raising its full-year revenue guidance last night.
There were no surprises from the Fed this month… and that’s just how we like it! They kept interest rates unchanged at historically low levels and plan to keep them down there for the foreseeable future.
Fed Chair Jerome Powell did say that financial conditions have improved in recent months (thanks in large part to the Fed itself). However, we’ve still got a long way before recovering from this pandemic, especially since coronavirus cases spiked again and we still don’t have a vaccine.
Therefore, the most important thing Mr. Powell did today was reiterate what he’s already said many times before: the Fed will do all it can to support this economy until the pandemic is history.
Today’s Portfolio Highlights:
Large-Cap Trader: The portfolio swapped out a few positions on Wednesday… and booked THREE double-digit profits along the way. Those stocks were Alibaba (BABA, +54.2%), Tencent (TCEHY, +32.9%) and Repligen (RGEN, +20.4%). John sold the first two because he usually secures profits when big Chinese tech stocks go on a run.
It’ll take a lot to repeat this kind of success, but the editor thinks he can do it with these new buys:
• Pentair (PNR)
• Microchip Technology (MCHP)
• Cisco (CSCO)
MCHP is a Zacks Rank #1 (Strong Buy), while the other two are Zacks Rank #2s (Buys). These stocks are all from highly-ranked industries and have now strung together several quarters of positive surprises. More specifically, MCHP and CSCO have both beaten 14 straight quarters, while PNR has 10. Plus, they all have plenty of running room to get back to their highs. Read the complete commentary for John’s extensive analysis on today’s moves.
Home Run Investor: The portfolio is now filled up with 15 names after today’s addition of Commercial Metals Corporation (CMC), which Brian believes will capitalize on the increase in metals prices. The company has beaten earnings estimates in the past four quarters, including a 110% surprise in the most recent. Earnings estimates for this year and next have moved sharply higher, making CMC a Zacks Rank #1 (Strong Buy). The editor even thinks its valuation is “wonderful” right now. See the complete commentary for a lot more on this new addition.
Surprise Trader: The new buy for Wednesday was TPG Specialty Lending (TSLX), a Zacks Rank #2 (Buy) specialty finance company that’s focused on lending to middle-market companies. This name is also known as Sixth Street Specialty Lending. It has a positive Earnings ESP of 28.82% for the quarter coming after the bell on Tuesday, August 4. Dave added TSLX today with a 12.5% allocation, while also selling Criteo (CRTO). See the full write-up for more on today’s action.
Stocks Under $10: It was only a little over a week ago that Brian bought U.S. Xpress Enterprises (USX), a provider of transportation services with a “wonderful” chart and two consecutive quarters of positive earnings surprises. Well, the company did it again in its second quarter by beating the Zacks Consensus Estimate by 220%. Revenue also surpassed our expectations. Shares surged nearly 29% on Wednesday, which easily made it the best performing stock of the day among all ZU names. It is now up more than 23% in the portfolio since being added just 8 days ago.
Have a Good Evening,
Jim Giaquinto
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