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A late-session rally gave the NASDAQ and S&P their first positive sessions since reaching all-time highs just before the Fourth of July (a.k.a. the third of July).
The Dow gave it a good try but couldn’t get back into the green.
Except for that late uptrend, it was a slow, low volume session as investors wait for Fed Chair Powell’s testimonies to Congress on Wednesday and Thursday.
It’s the same story as yesterday. The market desperately wants and fully expects a rate cut at the end of the month. However, last week’s jobs report was so solid that it calls such a move into question.
So the comments will be dissected by investors for any clues on the Fed’s future plans.
In the meantime, the market seems content to rest just under record highs and wait for the next catalyst.
On Tuesday, the NASDAQ really didn’t need that late-day surge as the index spent most of the session in the green. It was a good day for the FAANGs, including gains of nearly 2% for Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB) along with a 1% advance for Netflix (NASDAQ:NFLX).
Apple, which was a weight on the market yesterday with a 2% slump, returned to the plus side on Tuesday with a 0.61% increase.
The NASDAQ ended higher by 0.54% (or about 43 points) to 8141.73.
The S&P had a true turnaround. The index spent the entire session on the losing side until the final hour when it rushed higher to close with a 0.12% gain at 2979.63.
The Dow slipped by more than 150 points earlier in the day, but narrowed those losses significantly and almost followed the S&P into the green. The index settled for a slight loss of only 0.08% (or about 22 points) to 26,783.49.
Will we see more new highs this week? Despite a couple days of losses, stocks are still just below record territory. Let’s see what Mr. Powell has to say…
Today's Portfolio Highlights:
Stocks Under $10: The addition of Harmonic Inc. (HLIT) on Tuesday leaves the portfolio just one position away from a full complement of 15 names, which is exactly where Brian wants to be heading into earnings season. This Zacks Rank #1 (Strong Buy) is focused on video infrastructure products, which allow media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers around the globe. HLIT has beaten the Zacks Consensus Estimate in each of the last four quarters and has a constructive chart that’s moving higher. The editor believes this name will soon push through its 52-week highs and then keep going. Read the complete commentary for more on this new buy, including the Comcast (NASDAQ:CMCSA) news that came out after the close.
Income Investor: The portfolio wants to get back into healthcare giant Johnson & Johnson (NYSE:JNJ) after selling it in January for a double-digit return. At the time, earnings estimates were on the decline amid the talc powder scandal. However, the stock has remained a ‘dividend aristocrat’ through all its challenges by increasing its payout for 56 straight years. Maddy was also impressed with the first quarter report, which showed how JNJ’s diversification keeps it among the strongest and most stable names in the market. With the company being cleared in the most recent talc powder trial, the editor thought this was a good time to re-invest in JNJ. Read the complete commentary for more specifics on this new addition.
Surprise Trader: Buckle your seatbelts because additions are about to take off in this portfolio now that earnings season is near. Dave got it started on Tuesday with a 12.5% allocation in United Airlines (UAL), which has a noteworthy Earnings ESP of 10.9% for the report coming after the bell next Tuesday (July 16). This Zacks Rank #1 (Strong Buy) is also part of a space (airlines, of course) in the top 18% of the Zacks Industry Rank. UAL has easily beaten the Zacks Consensus Estimate in the past two quarters. Read the complete commentary for more on this new buy.
ETF Investor: The portfolio traded in its robot fund on Tuesday since Neena found a cheaper and more effective model. The ROBO Global Robotics and Automation Index ETF (ROBO) has performed very well for the service, but it’s no longer the only game in town for this niche area. The editor has been thinking about adding the Robotics and Artificial Intelligence ETF (IRBO) for a while now, and today she finally made it happen. This fund is much smaller than ROBO, but has outperformed its counterpart since inception due to a difference of holdings in this hot space. Neena decided to sell ROBO for a more than 33% return and replace it with the addition of IRBO. Read the complete commentary for more on this swap.
Insider Trader: Railroad components maker Wabtec (WAB) has performed well for the portfolio since being added in May. At that time, the stock was down more than 30% over the past year. However, WAB has recovered a good amount of that loss since Tracey picked it up in response to a trio of insiders buying shares. The editor doesn’t want to push her luck indefinitely in this name, so she sold half of WAB on Tuesday for a return of 12.9%.
Zacks Short List: This week's adjustment included short-covering Ionis Pharmaceuticals (IONS) for a nearly 12% return in a little over two months. The spot was filled on Tuesday with the addition of SAP SE (DE:SAPG) (SAP). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short List Trader Guide.
Until Tomorrow,
Jim Giaquinto
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