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The Dow just soared by more than 1000 points for the second time this week, following a more moderate swing in the Super Tuesday primaries and some good economic data.
The strong showing of former Vice President Joe Biden last night certainly provided a lift to the healthcare space, which helped the market fully recover from yesterday’s nearly 3% plunge as a major player like UnitedHealth (NYSE:UNH) surged by 10.7%.
The end result was the Dow soaring 4.53% (or about 1173 points) to 27,090.86 for the second largest single-day points gain in history. Of course, the largest was on Monday!
Meanwhile, the S&P jumped 4.22% to 3130.12 and the NASDAQ improved 3.85% (or 334 points exactly) to 9018.09.
The major indices are now within 10% of their all-time highs and, therefore, are out of correction territory for now, while the NASDAQ is actually back to being positive for the year.
But politics was far from the only thing happening on Wednesday. We had one of those delayed reactions to the Fed’s surprise 50bps cut, which the market really complained about on Tuesday (even though its exactly what investors wanted).
Also, the ISM services sector index rose to 57.3 in February, which was its highest point in a year and a nice advance from the previous month’s 55.5. (Any reading above 50 means expansion). Also, private payrolls added a better-than-expected 183,000 last month, according to ADP (NASDAQ:ADP).
This data suggests that the consumer is still doing pretty good despite the coronavirus.
Speaking of Covid-19, it won’t stop making headlines anytime soon since it's still spreading outside of China, including here in the U.S. But the big question is: Will the market continue to have the extreme reactions that saw stocks plunge 12% last week? Or has it calmed enough to rally out the next two days?
Let’s see what happens…
Today's Portfolio Highlights:
Insider Trader: There’s no way of knowing yet if we reached the low last Friday, but we DO know that the insiders are buying. Therefore, Tracey threw caution to the wind and added these five names on Wednesday:
• Home Depot (NYSE:HD) – a director bought
• Chevron (NYSE:CVX) – two directors bought
• Verizon (NYSE:VZ) – one executive bought
• Huntsman (HUN) – four insiders bought (cluster buy)
• Papa John’s (PZZA) – the CEO bought
Read the complete commentary for a lot more on each of these new buys.
Surprise Trader: Shares of Vera Bradley (VRA) have come under pressure in the broad selloff, but Dave thinks the worst of the selloff is behind us now. Therefore, he had no problem adding this retailer of women’s accessories today. The company has a positive Earnings ESP of 0.65% for the quarter being reported before the bell next Wednesday, March 11. That would mark EPS growth of 108% from last year, which would go nicely with expectations for sales growth of nearly 35%. The editor also sold BMC Stock Holdings (BMCH) after getting beaten up in the selloff. Read the full write-up for more.
Counterstrike: "With Bernie almost out of the picture, the market shrugged off Corona today. We continue to struggle with the spreading, but I don’t see the reason to be fearful. I’m personally disappointed with the panic over the last week from the media, the Fed and all of us collectively. This herd mentality that has been on display, whether it be the markets or at the local Costco (NASDAQ:COST), will always lead bad results.
"Going forward, the headlines of economic data will be more important than any corona headlines (unless really terrible). The data that comes may be shockingly bad, especially out of Asia. However, the market reaction to data is always more important than the actual data. We all know what’s coming, now how do we react?" -- Jeremy Mullin, who had the best performer of the day as eHealth (EHTH) took off by nearly 22% on a strong showing for healthcare.
Have a Great Evening,
Jim Giaquinto
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