For the second consecutive week, the market rallied in its opening session amid encouraging vaccine news and increasing momentum to re-open.
The Dow jumped 2.17% (or nearly 530 points) on Tuesday to 24,995.11. Last Monday, the index soared over 900 points and managed to hold onto most of that gain throughout the week.
The S&P (NYSE:SPY) advanced 1.23% to 2991.77. This index and the Dow traded above 3,000 and 25,000, respectively, in the session, but final-hour sluggishness left them just shy of those marks by the close.
The NASDAQ had trouble keeping up with its counterparts, as money flowed out of tech and into beaten down names during all the giddiness. The index could only manage an advance of 0.17% (or about 15 points) to 9340.22.
The banks had an especially strong day with impressive performances from Citigroup (NYSE:C, +9.2%), Wells Fargo (WFC, +8.7%), Bank of America (NYSE:BAC, +7.2%) and JPMorgan (NYSE:JPM, +7.1%).
Carnival (CCL, +12.6%) also had a good day, along with airlines like United Airlines (UAL, +16.3%), American Airlines (NASDAQ:AAL, +14.9%) and Delta Air Lines (NYSE:DAL, +13%).
The FAANGs were all lower except for a slight gain in Alphabet (NASDAQ:GOOGL) (GOOG, +0.47%). Tech has been leading the market throughout its impressive, more than 30% rebound from the coronavirus low on March 23. However, investors feel more comfortable in broadening their coverage when optimism is high.
Last week it was all about Moderna (NASDAQ:MRNA), but this week Novavax (NASDAQ:NVAX, +4.47%) and Merck (MRK, +1.17%) took center stage.
NVAX announced its first human testing of its potential coronavirus vaccine, while MRK is working on two separate vaccines through an acquisition and a partnership.
Meanwhile, Memorial Day weekend is the unofficial start of summer, and the amount of people that left seclusion to come out into the sun shows that the country is growing more comfortable in re-opening… as long as we continue to practice social distancing, of course.
And it’s not just the people. The NYSE trading floor is up and running again and Apple (NASDAQ:AAPL) plans to open 100 more stores this week.
Today's Portfolio Highlights:
Stocks Under $10: The portfolio is a bit heavy on tech and biotech at the moment, so Brian went someplace different for today’s addition. The new buy is Ardmore Shipping (NYSE:ASC), a Zacks Rank #2 (Buy) shipper that deals mostly in oil and gas. The editor can’t believe this stock isn’t a Zacks Rank #1 (Strong Buy) yet, as earnings estimates for this quarter, next quarter and this fiscal year have all soared in the past 30 days. Plus, ASC has beaten earnings estimates in three of the past four quarters. The portfolio believes this could be a good long-term winner with a little patience. He also sold Magic Software (MGIC) for a nice gain of nearly 11% in about 9 months.
By the way, the two best performers of the day came from this portfolio… and neither of them should be surprises to subscribers. Maxar Technologies (NYSE:MAXR) jumped 42.7% and PharmAthene (ALT) soared 38.5% on Tuesday. Both of these names have routinely made the Top 5 List of late. In fact, ALT is also THE best mover among all ZU portfolios over the past month with a rise of 166.5%.
Zacks Short List: The portfolio swapped out two names in this week’s adjustment. It short-covered Ryman (NYSE:RHP) Hospitality Properties (RHP) and Aptiv PLC (NYSE:APTV) and then filled those open spots by adding Incyte Corp. (NASDAQ:INCY) and Twitter (TWTR). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Black Box (NYSE:BOX) Trader: The Memorial Day holiday pushed this update back a day, but it was well worth the wait as the portfolio replaced half of its positions this week. The stocks sold on Tuesday were:
• Humana (NYSE:HUM)
• Berry Global Group (NYSE:BERY)
• DaVita (NYSE:DVA)
• Kroger (NYSE:KR)
• Teekay Tankers (NYSE:TNK)
The new buys that filled the service back up included:
• United Natural Foods (NYSE:UNFI)
• Dollar General (NYSE:DG)
• Wayfair (NYSE:W)
• Virtu Financial (NASDAQ:VIRT)
• Vistra Energy (NYSE:VST)
Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.
Counterstrike: "The bulls should give themselves a big pat on the back. The S&P 500 hit the 3000 mark today and broke the 200-day moving average. This is a tremendous feat, considering the bad news that is constantly trying to hammer markets lower.
"There is just a lot of positive movement towards reopening and virus containment. This has a lot of investors hopeful that the recovery in the second half of the year will be strong.
"The divergence has now switched, with Nasdaq stocks bringing up the rear and S&P stocks ripping. This rotation makes sense as the most beaten down stocks are now considered as bargains as economies reopen. With that idea, the stocks that were hot in the theory that everyone has to stay at home are now being sold. It will be interesting to see how long this divergence will last and if the spread between the S&P and the Nasdaq tightens and things normalize." -- Jeremy Mullin
Until Tomorrow,
Jim Giaquinto
Recommendations from Zacks' Private Portfolios:
Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>
Zacks Investment Research