Late-Day Rally Keeps Dow, S&P in Record Territory

A late rally in Monday’s session kept last week’s momentum going, which means two of the major indices reached new records once again while tech continued recovering from its recent selloff.

The NASDAQ easily had the best performance today with a rise of 1.05% (or nearly 140 points) to 13,459.71. We saw strong results from heavy hitters like Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) and Facebook (NASDAQ:FB), which each advanced 2% or more on the day.

Last Monday, this index slipped into correction territory, but it ended up gaining 3% for the week by Friday’s close. The result snapped three straight weeks of losses and now the index is within 5% of making history again.

The other two major indices have been hitting records for several days now, which continued in this session. The S&P rose 0.65% to 3968.94, while the Dow improved 0.53% (or almost 175 points) to 32,953.46. These indices are coming back from a week that saw gains of 2.6% and 4%, respectively.

The Dow has now reached new highs for four straight sessions, as it benefits from the rotation into recovery names. The S&P is right behind with three straight days of new records.

The 10-year Treasury yield remains above 1.6%, which is too high for investor comfort. But it was down a bit in the session after spiking higher last Friday.

You can be certain that Fed Chair Jerome Powell will be saying something about rising yields after the Committee’s two-day meeting on Wednesday. He’ll also speak about inflation; the impact of the recently-signed $1.9 trillion relief package; investor concerns about an overheated market; and much more.

Mr. Powell is expected to stay the course and reiterate the Fed’s support for this economy as we get back to normal. However, it’s all about the language he uses.

Today's Portfolio Highlights:

Stocks Under $10: Over the weekend, privately-held digital payments company Stripe announced that it raised $600 million, boosting its valuation to $95 billion. Brian thinks such news will be a big spark for a fellow fintech name like Mogo (MOGO). Over the past four quarters, the company has beaten the Zacks Consensus Estimate three times and matched once. Most importantly to the editor, those surprises have been getting bigger. In fact, the most recent beat was 109%!. Rising earnings estimates for next year have made MOGO a Zacks Rank #2 (Buy). In other news, the portfolio has enough exposure to the oil patch, so Brian thought this was a good time to sell Northern Oil & Gas (NOG) for a solid 49.6% return in just under three months. Read the complete commentary for a lot more on today’s action and be prepared for another move tomorrow. Meanwhile, this portfolio had a top performer on Monday as Himax Technologies (NASDAQ:HIMX) rose 10.2%.

Surprise Trader: You might not think that a ‘business development company’ would have a lot of growth, but Barings BDC (NYSE:BBDC) would beg to differ. Next year’s revenue and earnings growth are expected to climb more than 41% and nearly 24%, respectively. Furthermore, BBDC, which makes debt investments in middle market companies, reported a 13% positive surprise last time, which was its first beat in three quarters. Now the company has a positive Earnings ESP of 7.55% for the quarter coming before the bell on Wednesday, March 24. Dave thinks BBDC has turned a corner, so he added this name on Monday with a 12.5% allocation. The editor also sold Resideo Technologies (NYSE:REZI) for an 8% return in less than a month. Read the full write-up for more.

Technology Innovators: The first of two new buys this week is Covetrus (NASDAQ:CVET), a Zacks Rank #2 (Buy) software play that provides animal-health technology and services. This stock is right on the verge of becoming a mid-cap, so Brian got involved today before it joins a new league of bigger stocks. CVET has beaten the Zacks Consensus Estimate in three of the past four quarters, while earnings estimates for this year and next have improved. The editor appreciates the topline growth of 11% in the most recent quarter and the beatable estimates for the full year. Get more specifics about this new pick in the full write-up. Brian wants the portfolio to be fully invested, so they’ll be another buy later this week to get the service up to 15 names.

Black Box Trader: The portfolio only swapped out two names in this week's adjustment. It sold Dick's Sporting Goods (NYSE:DKS, +10.8%) and Vista Outdoor (NYSE:VSTO) on Monday, and then re-filled these spots by adding Olin Corporation (NYSE:OLN) and United Natural Foods (NYSE:UNFI). Read the Black Box Trader’s Guide to learn more about this computer-driven service.

All the Best,
Jim Giaquinto