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This sluggish market continued to amble along on Thursday, but the Dow couldn’t buck the trend this time and finished in negative territory for the first time in a week.
The index slipped 0.38% (or nearly 120 points) to 31,493.34, which snaps three consecutive sessions of record highs. The Dow hadn’t closed in the red since last Thursday, February 11. Meanwhile, the NASDAQ dropped another 0.38% (or about 100 points) to 13,865.36 and the S&P dipped 0.44% to 3913.97.
The latter two indices have been in negative territory all week heading into Friday. To be fair, though, that only accounts for three sessions given the holiday on Monday.
Nevertheless, the S&P is down about 0.5% so far this week, while the NASDAQ has dropped 1.7% as investors take a break from tech amid rising bond yields and inflation. (Interestingly, the NASDAQ gained 1.7% all of last week.)
You want to know how ho-hum this week has really been? The Dow is only up by a little more than 0.1% through Thursday, despite its three days of record highs.
Walmart (NYSE:WMT) was certainly no help as the country’s largest retailer dropped nearly 6.5% after mixed fourth-quarter numbers. Unfortunately, the market isn’t rewarding “mixed” quarters this season. Investors shrugged off the strong sales and instead focused their attention on the earnings miss and the soft outlook.
We’ll be seeing a lot more retail reports here in the waning days of this better-than-expected earnings season. The market’s interest in these reports has been piqued by yesterday’s strong retail sales number for January, which jumped by 5.3% and shattered expectations for a gain of just over 1%.
Another less-than-inspiring report on Thursday came from jobless claims, which rose to 861,000 last week from an upwardly revised 848K in the previous week. The result also missed expectations for the second time in a row after beating forecasts in the previous three weeks.
Today's Portfolio Highlights:
Technology Innovators: Shares of Twilio (NYSE:TWLO) gained nearly 8% today after a strong quarterly report, but Brian is going to add this cloud communications platform anyway. He wants to get long for the next several quarters with this name, as the potential for a post earnings drift upward is “very high”. The editor was most impressed that TWLO reported a profit of 4 cents when a loss of 7 cents was expected. Also, the topline beat expectations by 25% in a sign that this stock is a “great growth story”. Don’t be surprised if earnings estimates move higher from here. Read the full write-up for more on today’s addition of TWLO.
Surprise Trader: With a positive Earnings ESP of 4.09% for its upcoming report, Rent-A-Center (NASDAQ:RCII) looks set to beat the Zacks Consensus Estimate for a fifth straight quarter. This Zacks Rank #2 (Buy) rent-to-own leader reports after the bell on Wednesday, February 24. It beat expectations by nearly 3% last time. Dave added RCII on Thursday with an 11% allocation and also sold the underperforming Sonic Automotive (NYSE:SAH) position. Read the complete commentary for more on today’s moves.
Healthcare Innovators: Late last month, this portfolio sold Novavax (NASDAQ:NVAX) for a positive return of approximately 70%. Well, a couple recent analyst upgrades have convinced Kevin to pick it up again, especially on expectations that covid-19 vaccines will be here to stay (like the flu shot) and the frontrunners in the field will be the biggest beneficiaries. The editor also picked up Phio Pharmaceuticals (PHIO), which is focused on small interfering RNA (siRNA). The company released positive pre-clinical data in November, but as you can probably tell this is very early-stage data. Therefore, PHIO is a highly speculative investment, but the editor feels a small risk is worth the potential for RNA-I therapies to fight cancer. Read the complete commentary for all the specifics on when to buy these names, including the ‘4 tailwinds’ for NVAX moving forward.
Counterstrike: The chart for eBay (NASDAQ:EBAY) is screaming “breakout!” right now, and Jeremy is tired of waiting for the pullback that just doesn’t seem to be coming. Therefore, the editor added a small 4% position in the e-commerce pioneer and will add more on any selling. EBAY is a Zacks Rank #2 (Buy) that reported solid earnings earlier this month, including a positive surprise of 3.6% and a raised guidance for Q1. Meanwhile, Jeremy has lost patience with Whirlpool (NYSE:WHR), so he sold this stuck-in-the-mud stock on Thursday for a slight loss. Read the full write-up for more on today’s action.
Blockchain Innovators: "Three days of morning selling taking the market down until it did a triple-tap of last week's lows. Today's selling took the market down to the February 10th low, an area that was defended the following day. There were not enough sellers to break the ice this morning, and stocks turned things around into the bell to finish off on the right foot.
"I see a bid into the overnight session here in the early evening. Tomorrow's open is going to tell us a lot. If the big money comes out selling again, we could be in for some more downside action and a retest of that low. I would expect it to break if the market reverses from here. If not, we should be back to the races with high beta leading the way.
"Three days of negativity for the broad market during the US session. I doubt this trend continues tomorrow. I am fully expecting a rally into the weekend based on my chart work the last couple of days. I will be looking for high beta names a result." -- Dave Bartosiak, who had the top two biggest movers today among all ZU services with Cleanspark (NASDAQ:CLSK, +25.9%) and Brightcove (BCOV, +21.8%).
All the Best,
Jim Giaquinto
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